Apple to sell fewer iPhones mostly due to global semiconductor crunch, J.P.Morgan says

• JPM slashed Apple forecast for the first quarter of 2022

• Needam earlier said it expects iPhone shipments to reduce by 10 million in the next quarter

Forecast for Apple Inc’s iPhone sales have been slashed by J.P. Morgan on Tuesday.

The banking giant became the second brokerage in two weeks to cut the forecast before the crucial holiday quarter sales as the worldwide semiconductor shortage and factory closures in Asia is catching up to the iPhone maker.

JPM analyst Samik Chatterjee in a note to clients said the brokerage trimmed the iPhone revenue estimate to $63 billion for the first quarter of fiscal 2022, a yearly fall of nearly 4%.

Last week, another brokerage firm Needham said it expected iPhone 13 shipments to total 80 million units in the first quarter and cut its estimates for the holiday quarter by 10 million units citing supply chain issues including the chip shortage.

For the fourth quarter, JPM expects Apple to sell 58 million units and earn $46 billion, while the Wall Street expected a revenue of $41 billion.

Supply Crunch

While Apple managed to dodge the supply crunch better than many other companies due to massive purchasing power and long-term supply agreements with chip vendors.

Supply chain bottlenecks and lockdown in Asian countries are hampering its production timelines.

Bloomberg last week reported the Cupertino giant is likely to slash production of its iPhone 13 by 10 million units due to the supply shortages.

"We continue to see strong demand for iPhone 13 and 5G iPhone SE relative to low investor expectations to act as a catalyst, the timing of realization of which, although delayed on account of supply headwinds, is unchanged in magnitude," Chatterjee said.

However, Apple on Monday released its two new processors which is more powerful than their previous M1 processor which is built in-house chips.

Picture Credit: FT