NEW YORK, NEW YORK – SEPTEMBER 20: Apple CEO Tim Cook greets customers at the grand reopening of Apple’s flagship Apple Fifth Avenue store on September 20, 2019 in New York City.
Taylor Hill | WireImage | Getty images
After a shockingly strong quarter in which Apple’s sales grew 54% to nearly $ 90 billion in sales, with double-digit growth in every product category, Wall Street is already asking if Apple can last for the rest of the year .
While Apple has not provided official future guidance since the start of the pandemic, CFO Luca Maestri said Apple would grow again in the quarter ended in June, with “strong double digits.”
But there were some caveats.
As it turns out, Apple is dealing with the same microchip shortage that has throttled businesses and industries around the world, despite the legendary operations group, founded by CEO Tim Cook, which has been locking key components at competitive prices for years.
Apple said on Wednesday that it expected third-quarter revenue to be about $ 3 billion to $ 4 billion less than it could be if it didn’t have supply issues, mainly for its iPad tablets and Mac laptops and desktops. (Analysts polled ahead of Wednesday’s earnings expect Apple to report about $ 70 billion in revenue next quarter.)
Cook said Apple’s problem lay mainly in “legacy node” chips that use older manufacturing methods, compared to the cutting-edge high-performance chips that power the heart of its gadgets.
Cook didn’t specify which parts were in short supply, but Apple buys many legacy node chips for functions that send data to displays, power cameras, decode audio, and manage batteries.
“Most of our problem is licensing those legacy nodes, there are a lot of different people, not only in the same industry, but in other industries using legacy nodes,” said Cook, adding that he wasn’t quite sure how much demand to production capacity that might exist from competitors and other industries.
In the end, Apple stood out optimistically, especially when compared to companies in other industries, such as automobiles, who have been warning of chip shortages for months. For example, Ford said Wednesday it would lose half of its production in the second quarter due to the shortage of microchips.
Apple emphasized that part of the reason it predicts supply shortages in the current quarter is due to massive demand. IPad sales are up 79% in the quarter and Mac sales are up 70%, so clearly there are a lot of people who want to buy them.
“For Mac, for example, if you put it in context, the last three quarters of Mac were the best three quarters ever in this product history, right?” Maestri said.
If there’s one company built to overcome chip supply chain challenges, it’s Apple, which buys massive amounts of components every year and is a significant enough customer to remain a priority for chip makers and – designers.
In fact, one of the reasons for Apple’s second-quarter outbreak is that it had no product shortages during the period, said Cook, attributing this to the company’s expertise in the supply chain.
“How can we do that? You end up collapsing all of your buffers and offsets. And that’s happening all the way through the supply chain. So that allows you to go a little bit higher than what we expected to sell when we went.” in the quarter. “