Production

Apple cuts iPad production to power iPhone 13 with chips

TAIPEI – Apple has cut iPad production sharply to allocate more components to the iPhone 13, multiple sources told Nikkei Asia, a sign that the global chip supply crisis is hitting the company even harder than it does. ‘she had not previously indicated.

Production of the iPad was down 50% from Apple’s initial plans over the past two months, sources with knowledge of the matter said, adding that parts intended for older iPhones were also being moved to it. ‘iPhone 13.

The iPad and iPhone models have a number of components in common, including main and peripheral chips. This allows Apple to move supplies between different devices in some cases.

The company is prioritizing the release of the iPhone 13 in part because it forecasts stronger demand for the smartphone than the iPad as Western markets begin to emerge from the coronavirus pandemic, sources said. . Europe and the Americas represent 66% of Apple’s revenue.

The peak in sales of new iPhones also comes a few months after its release, so ensuring smooth production for the iPhone 13, released on September 24, is a top priority for Apple right now.

Demand for the iPad, however, has also been robust thanks to the rise of work and distance learning amid the pandemic. Global iPad shipments soared 6.7% year-on-year to 53.2 million devices last year, securing a 32.5% global market share, far ahead of 19.1 % of No. 2 Samsung, according to IDC data. Total iPad shipments amounted to 40.3 million for the first nine months of this year, up 17.83% from the same period a year ago.

Global tablet shipments for 2020 amounted to 164.1 million units, up 13.6% from the previous year.

This is not the first time that Apple has favored iPhones over iPads. In 2020, it repurposed parts of the iPad to the iPhone 12, its first full line of 5G handsets, to protect its most iconic product from supply chain constraints during the COVID-19 pandemic.

This time around, buyers are facing significant wait times for the new iPads. In the Americas or Europe, those who ordered an iPad with 256 GB of storage at the end of October will have to wait until December 15 to be delivered, according to the Apple site. For those ordering the latest iPad mini, delivery will take place around the first week of December. Chinese consumers, Apple’s third-largest market, also have to wait up to six weeks for a new iPad.

Apple has recognized the impact of global supply constraints. CFO Luca Maestri said in a recent earnings briefing that iPad revenue for the October-December quarter is expected to decline due to component constraints, adding that it’s the only product that should experience a decline. CEO Tim Cook said July-September revenues were $ 6 billion lower than they would have been due to “industry-wide silicon shortages and manufacturing disruptions linked to the COVID “. The impact for the current quarter could be even greater, he said.

Brady Wang, technical analyst at Counterpoint Research, told Nikkei Asia that it was natural for Apple to prioritize iPhones over iPads in the face of component constraints.

“The scale of iPhone shipments of around 200 million units per year is much larger than that of iPads. Apple’s most important and critical ecosystems are all around the iPhone, its product. To add a point, the iPads don’t have as strong a seasonality as its flagship iPhones, which still launch in the fall, ”Wang said.

Meanwhile, Apple is already a dominant player in the tablet market with its iPads, Wang said. “Fewer users will turn to Android tablets if they plan to buy an Apple iPad but have to wait a little longer. However, there might be a possibility that people will turn to … Android phones if they can’t immediately buy an iPhone, “the analyst added.

Apple did not respond to Nikkei Asia’s request for comment at the time of publication.


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