© Reuters. File image: Apple Inc. logo appears. Hanging at the entrance to the Apple Store on 5th Avenue in Manhattan, New York, US, October 16, 2019. REUTERS/Mike Segar
By Subrat Patnaik and Chavi Mehta
(Reuters) – A global chip shortage may creep into Apple’s latest iPhone 13 smartphone (NASDAQ :), but analysts believe the tech giant can weather the impact by offsetting any lost holiday sales with a stronger offer next. general.
On Tuesday, Bloomberg reported that Apple is likely to cut production of the iPhone 13 by up to 10 million units and produce 80 million new iPhone models by the end of this year, due to a shortage of chips.
Apple had earlier told investors that the chip shortage would affect its iPhone products but declined to comment on Tuesday.
However, many Wall Street analysts haven’t changed their iPhone sales estimates after the news.
“The report does not inspire me to reconsider my estimate of iPhone units sold,” said Tom Forte, analyst at DA Davidson & Co.
According to Refinitiv IBES, analysts expect about 45 million units for the fourth quarter and 79.4 million units in the major holiday quarter.
“Apple has market-leading customer retention/loyalty.”
So that any production delay will push iPhone sales into future quarters,” Morgan Stanley (NYSE:) analysts wrote in a note.
Apple also has control over the vendors of its components, due to its massive purchasing power, meaning that while it may not be able to buy as many parts as it wants, it will likely get more than its competitors.
“Although we believe Apple is getting preferential treatment from the supply chain and is in the best position among hardware providers, it is not immune to the harsh conditions we feel ahead of the holiday selling season,” said Angelo Zino, analyst at CFRA Research.
For most of the past year, Apple has insulated its cash cow – the iPhone – from shortages by prioritizing ingredients over the popular product.
But a global shortage of chips has hurt Apple’s ability to sell Macs and iPads. In July, the company warned that it would begin to affect iPhone production and expected revenue growth to slow.
The company’s shares have fallen about 3 percent since its warning in July and are down about 1 percent on Wednesday.
The reported Apple production cuts could also be part of the iPhone maker’s regular launch of over-demand for hardware to prepare for an initial rush of customers and then shrink orders when sales trends become clearer, said Jeff Feldhak, research director at Counterpoint Research.
Fieldhack added that iPhone 13 sales appear healthy and higher than last year’s iPhone 12.
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