Apple faced supply constraints that were more severe than expected during its latest quarter, leading to a roughly $6 billion revenue hit — and the situation is still getting worse, CEO Tim Cook said Thursday.
While manufacturing disruptions in Southeast Asia related to COVID-19 are improving, the industry-wide chip shortage is not, Cook said during the company’s quarterly call with analysts. Demand for Apple products also continues to be high, Cook said as the company reported results for the fourth quarter of its fiscal 2021, ended Sept. 25.
Apple’s current quarter, the first quarter of its fiscal 2022, is expected to see an even greater revenue impact from the supply chain issues, he said.
“For this quarter, we think that the primary cause of supply chain-related [impacts] will be the chip shortage,” Cook said. “It is affecting pretty much most of our products currently. But from a demand point of view, demand is very robust. So part of this is that demand also is very strong.”
Ultimately, “we believe that by the time we finish the quarter, the constraints will be larger than the US$6 billion (AU$8 billion) that we experienced in Q4,” he said.
Still, Apple reported an all-time quarterly record for Mac revenue—as well as major growth in iPhone and iPad sales—during its latest quarter.
During the quarter, Mac revenue rose 1.6 percent from the same period a year ago, to US$9.18 billion. A key driver for the Mac growth was demand for the MacBook Air featuring Apple’s in-house M1 processor, CFO Luca Maestri said during the quarterly call Thursday.
The results broke the previous Mac sales record of $9.1 billion that was set during Apple’s fiscal second quarter at the start of the year. The new quarterly Mac record was also set without the help of Apple’s redesigned MacBook Pro models.
The new MacBook Pros, which began shipping this week, are powered by Apple’s new M1 Pro and M1 Max processors.
Overall for Apple’s fiscal fourth quarter, the company reported revenue growth of 29 percent, year-over-year, reaching US$83.36 billion (AU$115 billion). That was a record for Apple’s September quarter, but fell below the Wall Street analyst consensus estimate of US$84.85 billion. Apple’s stock price dropped 3.5 percent to US$147.21 in after-hours trading Thursday.
The industry-wide supply constraints are a combination of surging demand for connected devices, shortages on semiconductors and disruption in the supply chain, including massive congestion in major ports.
Apple saw “larger than expected supply constraints” during its fiscal fourth quarter, with a revenue impact of roughly US$6 billion, Cook said. That was more than double the supply chain-related impact on revenue from the previous quarter sequentially.
The Q4 impact was “primarily” driven by silicon shortages, with “COVID-related manufacturing disruptions” as a secondary factor, Cook said. The manufacturing disruptions in Southeast Asia have “improved materially” in October, he said.
Apple continues to see better availability for “leading-edge nodes”—newer chip technologies—than for “legacy nodes,” Cook said.
“The chip shortage is happening on legacy nodes. Primarily, we buy leading-edge nodes. And we’re not having issues on leading-edge nodes,” he said. “But on legacy nodes, we compete with many different companies for supply.”
iPhone, iPad Results
Apple’s fiscal fourth quarter included just two days of sales for the iPhone 13 series, but still saw major growth for the iPhone business. Apple reported a 47 percent increase in iPhone revenue during the quarter, year-over-year, to reach US$38.87 billion. (AU$51.7 billion).
Sales of iPad also expanded significantly thanks to factors such as strong interest in the iPad Pro, Maestri said. Apple’s iPad revenue during its fiscal Q4 grew 21 percent from the year before, to $8.25 billion ($AU11 billion).
During Apple’s fiscal first quarter, the company expects revenue to grow year-over-year for all of its product categories except for iPad, Maestri said. The company expects iPad sales to decline from the same period a year ago as a result of the supply constraints, he said.
For its fiscal fourth quarter, Cupertino, Calif.-based Apple also saw continued growth in its Services business (up 26 percent year-over-year to US$18.27 billion) and in its Wearables, Home and Accessories business (up 11 percent to US$8.79 billion).
Net income during the quarter was US$20.55 billion, or earnings of US$1.24 per diluted share. That was up from US$12.67 billion, or earnings of 73 cents per diluted share, during the same quarter a year earlier.
For Apple’s fiscal 2021 overall, revenue climbed 33 percent to reach $365.82 billion, up from US$274.52 billion during its fiscal 2020.