iPhone 13 Demand Slows Toward End of Year
Consumers Are Fed Up With Supply Issues
Apple (AAPL) is seeing demand for its lineup of iPhone 13 devices slow as supply issues prompt some consumers to give up on buying one. A lack of components had prompted Apple to cut its production target by 10 million devices earlier this year. The company had hoped to make up for the shortfall in 2022, but now demand is suffering. As a result, the iPhone maker is warning component suppliers that its orders may be lower.
That is not to say Apple won’t have a strong holiday season, it just may not be as strong as some expected. Supply-chain issues and delivery delays have driven consumers to the sidelines. With the threat of Omicron rising and inflation not easing, some consumers are holding back their purchases.
Upgrade Cycle Could Be Skipped
The low supply of iPhone 13s could prompt consumers to skip the upgrade cycle entirely. After all, Apple tends to release new models in the fall. The latest lineup, while well received in the marketplace, is viewed more as an incremental upgrade from the iPhone 12 than a revolutionary change. More changes are expected in 2022, so some consumers may hold out for newer models.
Slower orders impacted Apple’s shares yesterday. This is not surprising given that the iPhone accounts for nearly half of Apple’s revenue. The weakening demand also weighed on Apple’s component suppliers including South Korea’s LG Innotek, Japan’s TDK, and Europe’s STMicroelectronics (STM) and Infineon Technologies (IFNNY).
Supply Chain Problems Are a Big Issue
While investors seem focused on low demand, supply-chain issues are also creating big problems for Apple. During its earnings call in October, the tech giant said supply constraints could cost Apple $6 billion in sales during the holiday quarter.
In addition to supply-chain constraints and a drop in demand, rising cases of the Omicron variant and stubborn inflation could also hamper Apple. The company’s products will still be on many people’s holiday shopping lists, but sales may not be as high as investors initially hoped.
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