Apple Stock Slips on Report of iPhone Parts Shortages - Barron's

Apple iPhone 13 smartphones.
Jeenah Moon/Bloomberg

Apple shares are down 1.5% in late trading Tuesday, pressured by a Bloomberg report that says the company is “likely” to reduce its iPhone 13 production target by up to 10 million units due to ongoing component shortages.

The article asserts that Apple (ticker: AAPL) had expected to produce 90 million new iPhones in the December quarter, but that the company is telling manufacturing partners that the total is now likely to be lower, due to a shortage of components from both Broadcom (AVGO) and Texas Instruments (TXN).

Apple never comments on production goals. In response to a query from Barron’s, Apple declined to comment on the report, which is sourced to “people with knowledge of the matter.”

On a conference call with investors after Apple reported June-quarter financial results, Chief Financial Officer Luca Maestri said that the company expected supply constraints to be worse in the September quarter, with a particular impact on both iPhones and iPads. In reporting March results, Apple had warned that supply constraints would trim June-quarter sales by between $3 billion and $4 billion, but Maestri said Apple was able to make adjustments and reduce the impact to slightly below the low end of that range.

In a recent research report, J.P. Morgan analyst Samik Chatterjee wrote that initial iPhone 13 production was delayed by a shortage of camera modules. He asserted that the shortage reflected manufacturing issues in Vietnam, where many factories have been shut down due to tight restrictions related to Covid. He also noted that some production facilities in China, where Apple sources some components, have been hampered by ongoing shortages of electric power.

The Bloomberg article notes that Apple buys wireless components from Broadcom and display-related parts from Texas Instruments. Bloomberg noted that Texas Instruments declined to comment. Neither chip company immediately responded to a request for comment this afternoon.

Apple shares were down 1.5%, at $139.44, in after-hours trading. They closed Tuesday at $141.51, down 0.9%.

Write to Eric J. Savitz at eric.savitz@barrons.com

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