Sponsored By

Apple's 5G juggernaut stumbles over supply chain troubles

Apple reported that supply constraints cut $6 billion out of its most recent quarterly financial report. And CEO Tim Cook said 'I don't feel comfortable in making a prediction' about what will happen next.

Mike Dano

October 28, 2021

3 Min Read
Apple's 5G juggernaut stumbles over supply chain troubles

Apple reported huge sales of its newest 5G smartphone in its most recent quarter, but company officials warned that supply chain problems are bad and getting worse.

"It is affecting most of our products currently," CEO Tim Cook said of the supply chain issue. Importantly, he declined to speculate on when the situation might improve. "I don't feel comfortable in making a prediction," he said Thursday during Apple's quarterly conference call, in response to questions from analysts.

Apple reported that supply constraints cut $6 billion out of its most recent quarterly financial report. Cook explained that there were two big factors that played into that number: manufacturing slowdowns due to COVID-19 and shortages of silicon components for electronics. He said the COVID situation improved "materially" by the beginning of October, but that silicon shortages are getting worse. He described those chip shortages as affecting "legacy nodes" in the company's products, rather than newer, high-end nodes.

Other companies, including Apple's smartphone rivals, have reported similar supply issues.

Further, Cook said the supply issue will have a bigger-than-$6-billion effect on Apple's critical fourth quarter holiday shopping season, but he wouldn't provide any figures or statistics around that guidance.

Overall, Apple reported revenues of $83 billion in the quarter, which was below most financial analysts' expectations. That's the first time Apple has missed such expectations since 2016, according to CNBC. The company's stock fell around 4% in trading immediately after the release of its earnings as a result.

Apple has been selling its new iPhone 13 models for around a month. "Customer demand was very strong," Cook said of reactions to the new gadgets. The company introduced 5G into the iPhone last year, with its iPhone 12.

Apple reported $39 billion in revenues from the iPhone during the period, up 47% year-over-year.

Interestingly, when questioned about 5G demand, Cook said the technology continues to be a driver for iPhone sales.

"It's a multiyear kind of thing," Cook said of customer interest in 5G iPhones. "The customer benefits hugely from getting a 5G phone."

That's noteworthy considering Cook and other Apple executives didn't spend much time on the topic of 5G when they unveiled the company's newest smartphone last month.

Cook also said the partnerships between Apple and global mobile network operators have "never been stronger."

Such comments are noteworthy considering mobile network operators around the world are racing to update their networks to 5G technology, and are keen to get 5G-capable phones into the hands of their customers. 5G technology can be faster and more efficient than 4G, and network operators hope it will spur more demand for their services.

Related posts:

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like