Limited Economy: Apple unable to meet demand on flagship products due to supply shortages

October 25, 2021

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3 min read

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What's going on here?

Continued chip shortages may result in the tech giants failing to meet its projected iPhone 13 production targets for 2021 by up to 10m units.

What does this mean?

Apple will be unable to hit their projected 90m iPhones because Broadcom Inc, which supplies wireless components, and Texas Instruments Inc., which supplies display parts, are struggling to deliver the relevant components. Whilst other suppliers have also been unable to keep up, affecting Apple’s ability to ship the new iPhone 13 and iPhone 13 Pro max to customers, these components rely on chips which continue to be in short supply. In addition to the limited iPhone stock, Apple has been struggling to meet the demand for the Apple Watch Series 7 and other products across the board. 

The new models were released to the market in September, yet it is said that orders may take up to a month to even be delivered, suggesting that this mid-November deadline may allow Apple to meet the intense demand amidst the crucial holiday gifting season. However, the White House has warned American consumers who are used to excessive availability that they may need to be patient during the Christmas period. A senior White House official responded to questions around holiday shopping by stating that “there will be things that people can’t get”. The White House believes that these items can be substituted effectively, and although frustrations may rise, that there is no need to panic.

What's the big picture effect?

It is no surprise that even tech giant Apple is susceptible to the fallout from the pandemic and supply chain shortages. This shortage is one of the most recent signs of the “serious bottlenecks affecting the flow of global trade”. As shares in Apple continue to fall, this lingering impact of COVID-19 highlights the broader dips within the US stock market. 

National economies have now been forced to recover at an accelerated pace as the pandemic eases. This has put immense pressure on “just-in-time, cross-border supply chains” that are responsible for keeping shelves stocked. In response to these disruptions, the US Department of Commerce has sent questionnaires to global chipmakers, however, executives in Taiwan and South Korea, where chipmakers are concentrated, have resisted this effort to make the supply chain more seamless. Furthermore, Gina Raimondo, the US Commerce Secretary publicised the proposed $52 billion plan to support chip manufacturing in Japan. This accelerated support will diversify where chips are made and can help alleviate the pressure and reliance on Taiwan and South Korea. 

These shortages display how limited stock in one part of the supply chain has serious knock-on effects when meeting consumer demand and is likely to last over the next year and further as national economies rush to adapt and recover from the production stagnation brought on by the pandemic.

Apple tends to set the “annual rhythm” for electronic supply chains yet right now, even they are struggling with similar disruptions despite their incredible buying power. The market needs to be aware that a multitude of sectors across the commercial scope have been adversely affected by this shortage. Businesses need to brace themselves and prepare for a potential dip in customer satisfaction as production tirelessly tries to meet a blitz of demand that was nowhere near as high during the course of the pandemic. As a society, we have become so accustomed to receiving what we want on demand as a result of a highly efficient and highly-connected global supply network.  It will be interesting to see how this all unfolds, and how our expectations might need to change, as the world emerges from the fallout of COVID-19.

Report written by Rida Ahmed

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