The global impact of the chip shortage is a recurring topic in the news. There is no technology company in the world that does not suffer from this crisis, to a greater or lesser extent. And the expectations about when the situation will improve vary according to the interlocutor, although the views generally agree that there are still complicated months to go. It is not surprising, therefore, that companies that have navigated the landscape with fewer shocks up to now are also beginning to pay the price of supply chain constraints. Such is the case with Apple, since for the first time in a decade it would have suffered a brake in the production of the iPhone.
According Nikkei Asia, Foxconn and Pegatron were forced to stop assembly of Apple devices during several days” due to missing components. But what is really revealing in this story is that the forced pause would have occurred in early October, during China’s Golden Week. And why is this data relevant? Because traditionally in this period the main factories in the Asian giant increase their production rate and work 24 hours a day, in order to satisfy the demand that is generated globally for the end of the year holidays.
Faced with such a complicated outlook caused by the shortage of chips, to which is added the restriction on the use of electrical energy in Chinese territory, those in charge of producing the iPhone understood that it made no sense to pay extra work shifts during Chinese holidays ; instead, they decided to give their employees a break. “That has never happened before”, they assured the aforementioned media.
The main source of income for Apple is the iPhone, so it is logical that in Cupertino this situation has not gone down well. So far, those on the block have survived the lack of semiconductors not only because of the weight of their name and their great economic power, but also because Tim Cook is a genius at logistics planning. It is true that the company has not been exempt from delays for the deliveries of its products, but in general terms, their situation has been more benevolent than that of other large technology companies. Regardless, the pressure on the production of your smartphone has come at a price; During the most recent presentation of their financial results – which marked a record quarter, by the way – Californians recognized a hit of approximately $ 6 billion due to problems in the production line.
The cheapest components are the most troublesome
Another important piece of information from the Nikkei Asia indicates that problems in iPhone production are not related to its more expensive components. Where the shortage hits is actually in the cheapest items that can be found in the guts of the Apple mobile. Specifically mentioned is the case of the transceivers provided by Nexperia, or the power management chips manufactured by Texas Instruments, among others. They are tiny elements and they cost only pennies, but they are common in a very wide range of devices; therefore, even those in Cupertino cannot guarantee the stock.
Bear in mind that many of these components are produced in Vietnam and Malaysia, two countries tremendously hit by the COVID-19 pandemic. This has led to the plants in charge of its manufacture having to cease their activities on multiple occasions. These situations, added to the complications typical of Chinese factories, have clearly complicated Apple’s expectations regarding the iPhone.
Apple would not meet its production goal for the iPhone 13
The deleterious effect of the chip shortage has left its mark on the forced hiatus in iPhone assembly in early October. While since then – and especially in November – both Foxconn and Pegatron have regained some of the rhythm of the production line, Apple would fall short of its year-end expectations.
The idea of those of Cupertino was to manufacture 95 million units of the new iPhone 13 line before the close of the current calendar; however, according to estimates made at the beginning of December, they would be far from achieving it. The most optimistic estimates speak of ending 2021 with between 83 and 85 million; while the definitive goal of producing 230 million iPhones in the year would not be met either.
For now, the shortage of chips does not give truce. Foxconn believes that the crisis will continue at least until the second half of 2022, putting more pressure on the iPhone production line. No one doubts that Apple will continue to present strong numbers in its next financial results, but the concern that the availability of its devices suffers while we go through the period of the highest sales in the year is understandable.