Reuters.- The global chip shortage has paralyzed major car factories, but has forced tech giants to be more flexible by diverting existing supplies to their most profitable products, analysts and executives said.
Apple Inc said Tuesday that the chip shortage had only mainly affected its iPad and Mac products in the last quarter, but that it would begin to impact the iPhone business, its best-selling product and the main driver of earnings, in the current quarter. .
“We will do everything possible to mitigate whatever set of circumstances we face,” Chief Executive Tim Cook said in a video conference following his most recent earnings release.
The comments provide insight into how Apple, known for its deft supply chain management through long-term deals with Broadcom Inc and Qualcomm Inc, is dealing with shortages ahead of the crucial Christmas quarter, when it sells millions of units of its new line of flagship phones.
Some analysts believe Apple could prioritize supplying chips for its new phones during the July-September quarter, which is typically the slowest period for iPhone sales, as buyers wait for the next models.
“I think it largely reflects the timing of new product launches, specifically related to new iPhone launches in September,” Angelo Zino, an analyst at research firm CFRA, said of Apple’s comments.
Even in normal times, he said, “new phone model cycles often start out with limited supply due to high demand needs before the holiday sales season.”
And within Apple’s current vein, the company is likely to direct the heaviest part of the supply chain to its less-lucrative products, said Jeff Fieldhack, research director at Counterpoint Research.
Its flagship phones also generate revenue from paid subscription services and accessories like AirPods.
“Assuming Apple prioritizes the iPhone 12 family, this will probably affect older iPads, Macs and iPhones more,” Fieldhack said.
The global shortage of microprocessors is due to a combination of factors including the consequences of quarantines imposed to slow the spread of Covid-19 last year and factories struggling to meet demand for chips, which have become ubiquitous in a world increasingly digitized.
The contraction in supply took the auto industry by surprise. Automakers like Ford Motor Co and General Motors Co had to stop production lines for their popular pickup trucks at a time when demand was booming as economies began to reopen.
The automotive industry relies almost exclusively on chips from some manufacturers, including Taiwan Semiconductor Manufacturing Co (TSMC) and Samsung Electronics Co Ltd of South Korea. The situation has highlighted this dependence on foreign suppliers as an Achilles heel for many companies. .
STRATEGIC APPROACH
Tech companies, traditional chip consumers, have been more nimble.
Advanced micro-device designer AMD, which makes central processor chips for personal computers and data center servers, has also redirected supplies.
The company, which has a new family of chips that outperforms its larger rival Intel Corp, has made steady gains in unit sales market share versus the chip giant, which retains more than 80% of the market. in general.
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AMD has responded to limited industry capacity by focusing on selling only its most profitable chips, leaving the lower end of the market to Intel, said Dean McCarron of Mercury Research, which tracks market share among chipmakers.
Intel has also been battling its own set of manufacturing challenges over the past few years, causing it to lag behind AMD and Nvidia Corp.
“We are targeting the most strategic segments of the personal computer market,” AMD CEO Lisa Su told investors on a conference call. “We believe that the data center business will continue to be a great driver for our business during the second half of the year.”
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