Supply Chain Crisis Keeps Apple From Selling All the Products It Wants, Costs Company $8 Billion

Supply Chain Crisis Keeps Apple From Selling All the Products It Wants, Costs Company $8 Billion

The people want Apple products. While Apple would be more than happy to oblige, it can’t, because there’s a global supply chain crisis. The crunch is costing the company billions in lost sales and keeping its money machine, the iPhone, at arm’s length from buyers.

Apple CEO Tim Cook on Thursday told CNBC that supply chain constraints and covid-19 manufacturing disruptions had cost the company around $US6 ($8 AUD) billion in lost sales. Cook made the comments in light of the publication of the company’s fourth quarter financial results for the fiscal year, which missed analysts’ earnings and revenue estimates for the first time in years.

That doesn’t mean that Apple didn’t have a successful quarter. It earned A$111 billion in revenue, a 29% increase year over year, and grew in all markets and product categories. The company just didn’t perform as expected, falling short of the roughly A$113 billion in revenue for the quarter that analysts projected.

“We had a very strong performance despite larger than expected supply constraints, which we estimate to be around $8 billion,” Cook said, according to CNBC. “The supply constraints were driven by the industry wide chip shortages that have been talked about a lot, and covid-related manufacturing disruptions in Southeast Asia.”

On a call with analysts, Cook said that the covid-related manufacturing disruptions had improved, but the chip shortages remain. The supply constraints for chips are related to chips on legacy nodes, he added.

The missed sales opportunities brought on by the supply crunch — which has affected the iPhone 13 as well as older products such as the  iPhone 11, iPhone 12, 2021 iMac, and Mac Pro, among others — will only get worse during the holiday season, Apple CFO Luca Maestri warned on the call, the Associated Press reported.

Despite this, Apple expects the December quarter to deliver its highest revenue in company history. This might indicate that Apple is seeing high demand for the iPhone 13 and its other recently announced products, such as the iPad mini, Apple Watch Series 7, third-generation AirPods, and MacBook Pro.

The company’s fourth quarter financial results also provided more insight into the performance of the iPhone, Apple’s golden goose. It might be hard to believe, but iPhone sales increased to A$52 billion, a 47% increase year over year. In other words, the company has managed to create a cult of iPhone stans that upgrade frequently enough to make it tons of money.

Nonetheless, Cook said that the chip shortage is preventing Apple from selling as many iPhones as it would like.

“Demand remains very robust,” he said.

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