Apple Inc AAPL is facing a shortage of chips used for power management in the iPhone, Bloomberg reported Wednesday.
What Happened: The supply constraints could affect the Tim Cook-led company’s ability to meet holiday demand for its flagship smartphone.
People with knowledge of the matter told Bloomberg that the Cupertino-based tech giant will get priority over other customers seeking the same parts.
The mounting demand for semiconductors — coupled with disruptions in the supply chain caused by the pandemic — are reportedly the main reasons for the shortage.
Cook had warned of supply constraints affecting the company’s devices including the iPhone 12 but did not mention power-management chips on Apple’s earnings conference call in October.
The Apple CEO said “it’s hard to predict” how long the supply constraints would last but disclosed that supply constraints extended to Mac, iPad, and some Apple Watches.
Why It Matters: Power management is more crucial in the iPhone 12 than the preceding models due to the phone’s additional camera features and 5G functionality, noted Bloomberg.
Apple’s iPhone 12 Pro uses components from Texas Instruments Inc TXN, STMicroelectronics NV STM, and Qualcomm Inc QCOM, according to an iFixit teardown, Bloomberg reported. The device also uses a power-management component designed by Apple.
Apple’s iPhone sales have fallen short by $1 billion compared with analyst estimates. The sales of iPads and Mac however beat expectations, according to CFRA analyst Angelo Zino.
At the end of October, the tech giant launched its “Apple One” bundle. Robust services revenue has helped the company offset the decline from its weaker iPhone sales.
Price Action: Apple shares closed nearly 4.1% higher at $114.95 on Wednesday and gained 0.9% in the after-hours session.
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