Apple Might Not Be Able to Make Enough iPhones for the Holiday Season
To be clear, Apple hasn’t emerged unscathed from the effects of the pandemic even from the beginning; it was forced to delay the iPhone 12 past its usual September launch until October, crossing from the normal Q4 release into Q1 2021, and there’s every indication that its plans to release a better 120Hz ProMotion display in the iPhone 12 Pro this year were scuttled by a lack of controller chips to power the new displays, which is likely the main reason that all of Apple’s iPhone models feature the same display technology for the first time in years (despite some contrived differences in maximum brightness levels).
However, it looks like Apple may now be encountering another big supply chain hurdle just as it attempts to ramp up iPhone 12 production for the holiday season and begin preorders of its smaller iPhone 12 mini and larger iPhone 12 Pro Max tomorrow.
According to Bloomberg, Apple is now struggling to overcome a shortage of the power management chips that it uses in its iPhones and several other devices, which could hamper its ability to keep up with holiday demand for the new iPhones.
While the Bloomberg report isn’t clear on exactly what impact the shortage may have on the actual supply of iPhone 12 units, sources are suggesting that suppliers will likely give Apple priority over other companies that use the same chips, likely out of a desire to avoid risking the more lucrative deals that stem from the massive scale at which the iPhone maker requires such chips.
The problem is being caused by increasing demand for chips across a wide variety of electronics combined with the lingering supply-chain disruptions from the ongoing global health pandemic. According to TSMC, which fabricates Apple’s A-series chips, 5G smartphones in general require 30 to 40 percent more chip content than 4G models. On top of this, many other device manufacturers such as Huawei have been hoarding components out of fear of a future chip famine.
Predicted Supply Constraints
To be fair, this doesn’t seem to be coming as a big surprise for Apple, which generally plans and prepares for such things. Apple CEO Tim Cook, who became legendary for his supply-chain management skills during his time as Apple’s Chief Operating Officer under Steve Jobs, warned investors last month that the iPhone 12 could experience supply constraints, which could also impact the Mac, iPad, and even some Apple Watch models, although he didn’t offer any specifics on what those constraints might be.
However, Cook noted during the earnings call late last month that supply issues for the iPhone are “not a surprise” when Apple begins ramping up production of a new model, adding that “it’s hard to predict” how long these constraints might last, but emphasized that Apple is always prepared for such contingencies.
This is one of the reasons why Apple also uses multiple suppliers for many of its chips, and the power management chips are no exception. iFixit’s recent teardown of the iPhone 12 identified chips from Texas Instruments, STMicroelectronics, and Qualcomm all serving different power management functions within the new iPhone models. On top of that, Apple also has its own power management chips as a result of its acquisition of Dialog Semiconductor a couple of years back.
Borrowing from Peter to Pay Paul
One approach that Apple seems to be taking to address some of its supply chain shortfalls is reallocating parts intended for iPads to use for the iPhone 12 Pro.
According to another report by Nikkei Asia, it’s not just the power management chips the are scarce, but Apple is also lacking in components for the LiDAR Scanner, which is likely one of the components that Apple is borrowing from its stock of iPad parts.
Nikkei adds that this has resulted in a drop in production of about 2 million iPad units, although clearly Apple feels it’s more important to keep up with the demand for the newer iPhone 12 Pro in this case.
The report also notes that Apple is placing more orders for older iPhone models to help “fill the empty space on shelves,” with approximately 20 million units of iPhone 11, iPhone SE, and iPhone XR being ordered for the holiday shopping season. While Nikkei implies that this is being done to compensate for iPhone 12 shortages, it’s still possible that at least some amount of older iPhones would be ordered up to be made available for the holiday season anyway due to their much more affordable prices.
What This Means for You
The simplest takeaway from this would suggest that if you’re looking to purchase one of Apple’s new iPhones, you should probably make the call to do so sooner rather than later, especially if you’re leaning toward one of the more popular model, colour, and capacity combinations.
At this point, Apple’s website already shows delivery times for iPhone 12 Pro orders at least 4-6 weeks out, edging well into early December, although considering that the standard iPhone 12 isn’t showing any delays just yet this could just be more confirmation of the reports we’ve already heard that iPhone 12 Pro demand took Apple by surprise, meaning it simply hasn’t produced enough units to keep up with the stronger than anticipated demand.
Of course, some of that could also be pent-up demand for the smaller iPhone 12 mini, which will be available for pre-order tomorrow alongside the much larger 6.7-inch iPhone 12 Pro Max, and it’s difficult to say for certain how quickly these models will sell out if Apple is already dealing with constraints, so if you’ve been itching to get your hands on the iPhone 12 mini, we’d suggest getting ready to hit the button as soon as pre-orders open up tomorrow morning.