Apple Set To Cut 2021 iPhone Production By 10 Million Units, Forced By Chip Shortage: Report

Apple Inc AAPL would reportedly cut production of its iPhone 13 smartphones for 2021 by 10 million units due to the ongoing chip shortage.

What Happened: The Tim Cook-led company had expected to make 90 million iPhone models in the final quarter of 2021, but now has informed its manufacturing partners that the total would be lower, Bloomberg reported Tuesday.

The cut in production is due to Broadcom Inc AVGO and Texas Instruments Inc TXN struggling with component deliveries, people familiar with the matter told Bloomberg.

See Also: How To Buy Apple (AAPL) Shares

Why It Matters: Apple sources display parts from Texas Instruments and wireless components from Broadcom, noted Bloomberg.

One of the Texas Instruments chips in short supply for the iPhone 13 series is reportedly related to powering the OLED display.

The iPhone maker is also facing chip shortages from other suppliers, as per Bloomberg.

The chip shortages are affecting Apple’s ability to ship its new models to customers as even though the iPhone 13 Pro and iPhone 13 Pro Max were put on sale in September, orders won’t be delivered for nearly a month.

In the company’s Q3 earnings call, Apple executives had taken stock of the chip shortage. 

“We do have some shortages," Cook said at the time. He said that the demand had been so great and so beyond Apple’s expectation “that it's difficult to get the entire set of parts within the lead times that we try to get those."

Even so, Apple could still get its iPhones in the hands of its customers in time for the holiday season, as per Bloomberg. 

The year-end quarter is crucial and is expected to generate nearly $120 billion in revenue, up 7% on a year-over-year basis.

Price Action: On Tuesday, Apple shares fell 1.3% lower at $139.63 in the after-hours session after ending the regular session almost 0.9% lower at $141.51.

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