Apple sees strong demand during a supply chain crisis — it’s a problem, but a good one to have.
The supply chain crisis has officially come to Apple, trimming an estimated $6 billion off the company’s record Q4 sales. Analysts had anticipated quarterly revenue of $84.8 billion, but Apple returned $83.4 billion. It is worth noting, however, that this was still a new Q4 record. The company acknowledged the headwinds during its Q4 financial analyst call on Thursday. Apple CEO Tim Cook described three prongs to the problem: COVID-related disruption to the supply chain, increased freight costs, and silicon shortages — particularly of “legacy nodes.” The company also warned that the challenge will continue into the current quarter, prompting some investors to sell on the news, while others saw a buying opportunity. After all, despite the haircutcApple still achieved record revenue across all its markets and product families. The impact of all these factors is that $6 billion shortfall between what Apple says it could have sold, and what it did achieve; the company expects to endure a similar impact in the current quarter. At the same time, Cook pointed out that demand for Apple’s products is growing dramatically, which means it is ramping up requests for the components to put inside them. “It’s just that the demand is so robust that we envision having supply constraints for the quarter,” he said. Cook offered what he called an “overly simplistic” explanation of some of the roots of the chip supply crisis. When the pandemic struck, many in the industry thought it would reduce demand for tech products, which drove them to reduce the quantity of components they ordered in. Production declined as a result. But what happened was that demand in many cases increased dramatically, creating a shortage of essential components.
