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Apple will sell fewer iPhones as the chip crisis worsens!

The global chip scarcity and factory closures in Asia have finally caught up with the technology giant, resulting in lower iPhone sales for the vital holiday quarter.

J.P Morgan is a global leader in financial services offering solutions to the world’s most important corporations, governments, and institutions, on Tuesday it became the second brokerage in two weeks to cut its forecast for Apple.

The brokerage trimmed its iPhone revenue estimate to $63 billion for the first quarter of fiscal 2022, which would be a yearly fall of nearly 4%, analyst Samik Chatterjee said

It was expected iPhone 13 shipments to total 80 million units in the first quarter and cut down its production by 10 million due to global chip shortage, said by Needham which is an independent investment bank and asset management firm specializing in advisory services and financings for growth companies.

 The company has told its manufacturers that the number of units would be lower because chip suppliers including Broadcom and texas instruments that are struggling to deliver components.

During the COVID-19 pandemic, many factories were shut down, which led to supplies needed for chip manufacturing being unavailable for months. After the increased demand for consumer electronics caused shifts that rippled up the supply chain.

Amid this crisis, Apple is one of the biggest chip buyers worldwide and its long-term supply agreements with chip vendors kept the production moving but soon it started to affect the production. Lockdown in countries like Vietnam in the second half of the year is hampering its production timelines.

Customers looking for an iPhone 13 are already being tested, with a few of the lengthiest wait times in recent years, according to analysts.

Bloomberg News reported last week that the Cupertino, California-based company is likely to slash production of its iPhone 13 by as many as 10 million units due to the global chip shortage.

JPM expects iPhones to bring in revenue of $46 billion after selling 58 million units, marginally higher than Wall Street’s forecast of $41 billion. According to Refinitiv IBES, analysts are expecting about 45 million units for the holiday quarter and 79.4 million units in the first quarter.

Chatterjee said that we all can see strong demand for iPhone 13 and 5G iPhone SE relative to low investor expectations to act as a catalyst, the timing of the realization of which, although delayed on account of supply headwinds, is unchanged in magnitude.

Apple also announced that its two new MacBook Pro models, which run on more powerful in-house chips, and new AirPods 3, will start shipping next week.

Despite the chip shortage, Apple announced hardware innovations for the holiday season, demonstrating that the company was flexing its supply chain muscles, according to Wedbush analyst Daniel Ives.

Global Business Magazine

Global Business Magazine

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