Apple is prioritising iPhone 13 over the iPad tablets
- Apple is producing fewer iPads to maximize output of its iPhone 13.
- The move is related to the global shortage of semiconductor chips.
- Shares of the American technology giant are still up 1.5% on Tuesday.
Apple Inc (NASDAQ: AAPL) doesn’t have enough components to produce all of its devices in planned quantities, sources told Nikkei on Tuesday.
Apple expects strong demand for the iPhone 13
The ongoing chip shortage pushed Apple into trimming iPad production to make components available for maximum output of the newly launched iPhone 13.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
Over the past two months, the American multinational produced about 50% less iPads than it had originally planned. Parts that were to be used to make older iPhones are also being allocated to the iPhone 13.
The move is partially related to the tech giant’s forecast that demand for its flagship smartphone will be much stronger than the iPad as the world pulls out of the global pandemic. In fiscal 2021, iPhone brought in $192 billion in revenue for Apple versus only $32 billion from the iPad.
Apple is yet to make an official comment on the news. Shares of the iPhone maker are up about 1.5% on Tuesday.
Chip shortage to continue in the holiday quarter
The news comes a week after Apple said the global shortage of semiconductor chips resulted in a $6.0 billion hit to sales that came in shy of the Wall Street estimates in the fiscal fourth quarter.
More alarming was that CEO Tim Cook said the impact of the shortage could be even worse in the holiday quarter that is historically known as the strongest one for the company every year.
Nonetheless, Apple has withstood the supply constraints better than most, thanks to its remarkable purchasing power and supply agreements (long-term) with the chip manufacturers. Despite challenges, Loup Ventures’ Gene Munster forecasts Apple to be a $200 stock in 2022.