Apple halted iPhone production for 'several days' due to supply issues, first time in decade - Nikkei

• Production of iPhone 13 fell 20% due to supply chain constraints in September and October

• Apple has already told its parts suppliers that demand for the iPhone 13 lineup has weakened

For the first time in more than a decade, Apple Inc had to stop production for its iPhone and iPad “for several days,” Nikkei reported on Wednesday, describing the halt as a “nightmare before Christmas,” citing sources familiar with the matter.

Nikkei said Apple’s production goes into overtime, usually around this time, to meet global demand for the holiday shopping season.

However, due to supply chain limitations and China’s ongoing power restriction, the company sent workers home due to limited work, the report mentioned.

“Due to limited components and chips, it made no sense to work overtime on holidays and give extra pay for front-line workers,” a supply chain manager told Nikkei Asia. “That has never happened before. The Chinese golden holiday in the past was always the most hustling time when all of the assemblers were gearing up for production.”

Even though the news of a production halt will worry some investors, but the share price of Apple jumped about 2% in New York and is bullish after Morgan Stanley on Tuesday raised the price target from $164 to $200.

Production cut

The holiday quarter is one of the busiest for Apple as many consumers seek to buy iPhones and iPads as gifts weeks ahead of Christmas.

However, after launching its flagship iPhone 13 range and new iPads in September, the global chip shortage and supply chain disruptions loomed over Apple as a significant threat.

The report indicated that the production of iPhone 13 smartphones fell 20% short, forcing the company to scale back production goal to between 83 and 85 million, down from its initial goal of 95 million units in September and October.

Moreover, the iPad production dropped even more by 50% since Apple prioritized iPhones over tablets, and older smartphones also fell short 25%.

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The report claimed that Apple is about 15 million units short of its goal to build 230 million iPhones in total this year.

Nikkei said the situation hasn’t improved much for iPads and older iPhones by November, as most of the shortages are related to peripheral components, including “power management chips from Texas Instruments and transceivers from Nexperia as well as connectivity chips from Broadcom.”

Weakening demand

Apple had already told its parts suppliers that demand for the iPhone 13 lineup has weakened, Bloomberg reported last week, citing people familiar with the matter, also mentioning that the company is now informing its vendors that those orders may not materialize.

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The iPhone maker no longer discloses how many iPhone units it sells per quarter, but the constrained supply and production halt will indeed affect revenue for the next few quarters at least.

Despite shortages and missed targets, the Cupertino giant is still pressuring its partners to “reaccelerate their production of the iPhone for November, December, and January,” Nikkei said.

Picture Credit: BBC