Apple supply crunch hits iPhone 13, some consumers are frustrated

Apple supply crunch hits iPhone 13, some consumers are frustrated

Apple Inc., which is suffering from a global supply crunch, is facing a different problem: slowing demand.

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People familiar with the matter said that some consumers have decided not to try to get the hard-to-find item, because of the fact that the company has told its component suppliers that demand for the iPhone 13 lineup has weakened.

Apple had cut its iPhone 13 production goal for the year by as many as 10 million units, down from a target of 90 million, according to Bloomberg News. It was hoped that the shortfall could be made up next year when supply is expected to improve. The people who said they didn't want to be identified because the discussions are private, the company is informing its vendors that those orders may not materialize.

The company is on track for a record holiday season, with analysts forecasting an increase of 6% to $117.9 billion in the final three months of the year. It won't be the blockbuster quarter that Apple and Wall Street had originally envisioned. Many consumers have been frustrated by shortages and delivery delays. They may forego some purchases if they don't like the omicron variant, which brings fresh concerns to the pandemic-weary shoppers.

That could mean skipping the iPhone 13 altogether and waiting for its successor to come out next year. The current lineup, which starts at $799 for the standard model and $999 for the Pro, is a modest update from the iPhone 12, which had a whole new design. There are bigger changes to be expected for the 2022 model, giving some shoppers reason to wait.

The iPhone is Apple's flagship product, accounting for more than half of its $365.8 billion in revenue during the last fiscal year, and rolling out upgrades is a delicate dance. With the iPhone 13 and Apple and wireless carriers launched aggressive rebate programs to spur purchases. In some cases owners of an iPhone 12 or earlier models were able to buy an iPhone 13 at little to no cost. During Apple's last earnings call in October, Chief Executive Officer Tim Cook said that demand for new products was very robust - fueled by interest in the latest iPhones, iPads and other devices - and that the company was on track for a record holiday quarter. The year-earlier period, it had sales of $111.4 billion.

He pointed out supply constraints as the company's biggest challenge. Cook predicted that the struggle to get enough components, particularly chips, would cost Apple more than $6 billion in revenue during the holiday quarter.

The constraints have hurt Apple partners as well. The company's main chip supplier, Taiwan Semiconductor Manufacturing Co., weakened recently, with October revenue falling 12% from the previous month to NT $134.5 billion $4.8 billion Last month. Apple's main iPhone assembler, Hon Hai Precision Industry Co., predicted that its business would shrink this quarter due to declines in consumer electronics and computing, as it continues to suffer from the chip shortage. On Oct. 24, IQE Plc saw its shares fall 24%, after it warned of softening smartphone demand, although the semiconductor company didn't name any particular customer.

There is more strain on shoppers pocketbooks. Consumer prices in the United States rose at the fastest annual pace since 1990. Despite stronger wage growth, food, gas and housing costs are eroding purchasing power.

Apple shoppers in the U.S. had been waiting for the much-prized Pro model to be delivered. Wait times are down to two weeks or less.

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