Apple Inc. AAPL has informed its component suppliers that demand for the iPhone 13 lineup has weakened ahead of the holidays, Bloomberg reported, citing people familiar with the matter.
What Happened: Apple’s warning signals that consumers have decided against attempting to purchase the hard-to-find iPhones amid shortages and delivery delays, as per the report.
Why It Matters: The news about the weakening demand for the iPhones comes as Apple continues to grapple with supply chain challenges amid the ongoing chip shortage.
It was reported in October that Apple cut its iPhone 13 production target for this year by 10 million units after the company’s suppliers Broadcom Inc. AVGO and Texas Instruments Inc. TXN struggled with component deliveries.
Apple was also reported to have severely reduced its production of iPad tablet computers in order to assign scarce components to its iPhone smartphone line.
Apple had aimed to make up for the shortfall next year when supplies improved, but the Tim Cook-led company has now informed vendors the orders many not materialize, as per Bloomberg.
The iPhone is Apple’s flagship product and accounted for more than 46% of Apple’s $83.4 billion in revenue during the latest fourth quarter.
Wedbush analyst Daniel Ives has estimated that Apple would sell about 40 million iPhones between the Black Friday weekend and Christmas, which the analyst said was a “record holiday pace” despite the ongoing chip shortage.
Price Action: Apple shares closed 0.3% lower in Wednesday’s regular trading session at $164.77, but rose 0.8% in the after-hours session to $166.00.
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