Apple chip shortage may not be over, but analysts say

Apple chip shortage may not be over, but analysts say

Apple's fourth quarter earnings were reported on January 27, 2022 in Washington, U.S. REUTERS Joshua Roberts File Photo

Jan 28 Reuters -- Apple Inc's AAPL.O triumph over the global chips supply-chain shortage has signaled good news amid troubled markets around the world.

The analysts say that's not so fast.

The iPhone maker, which had warned that supply issues would negatively affect its holiday-quarter revenue, posted record results on Thursday, boosted by sales of its premium phones. There are some remaining shortages that it sees as an improvement. Bob O'Donnell, chief analyst at TECHnalysis Research, said most of the supply-constrained issues are over for Apple but not necessarily for everyone else.

Companies from electric automaker Tesla Inc TSLA.O to Wafer fabrication equipment supplier Lam Research LRCX.O have warned that supply chain issues, which have crippled several industries, will continue to limit production this year.

Semiconductor companies tend to give priority to bigger players, such as Apple, for its huge buying power, huge demand for its products, and the ability to place custom orders for components used in its products. The chip makers are attracted to Apple's high-end chips because of the high-end chips.

This means that Apple has an advantage and can procure components faster than rivals.

While Apple got better service for more sophisticated chips, like many others, it faced problems with some older technology chips, according to Daiwa Capital Markets analyst Lou Miscioscia.

Chips used in Apple's iPads, which saw a 14% drop in revenue, use chips with older technology and supplies of those older chips were particularly tight, Apple Chief Executive Tim Cook told analysts.

Cook said that the constraints on the older chips, or nodes, were very significant in the holiday quarter. He said that there was an improvement in the March quarter in terms of constraints going down compared to what they were in the December quarter.

Elon Musk, Tesla's CEO, said this week that supply chain woes would limit production in all company factories. The chip shortage, while better than last year, is still an issue, he told analysts. Semiconductor equipment maker Lam Research LRCX.O noted new supply challenges, with the Omicron surge adding more disruption to freight and logistics operations. A few weeks into 2022, the company said it was seeing scarcity of certain components and parts, including semiconductors.

Market leaders and analysts in the semiconductor space held hope that supply issues would be resolved later this year.

That's going to be a concern for the industry, but Apple may be the exception, according to Romeo Alvarez, technology analyst at William O'Neil Co.