Apple’s iPhone Hot Steak, The Global Chip Shortage, and Biden’s Bill
The iPhone isn’t only the best-selling product by Apple, but it’s also the most popular smartphone in the whole world. Apple recently published data about its earnings that completely demolished the expectations of Wall Street. The majority of these earnings were driven by iPhone sales, and they were increased by approximately 50 percent on an annual basis. The total iPhone sales accounted for 39.57 billion Us dollars. In the March quarter, iPhone sales experienced a 65.5 percent annual increase. In the holiday quarter of Apple, the sales further went up by 17 percent and accounted for 65.60 billion US dollars.
Apple’s CEO Remarks
According to Tim Cook, the current CEO of Apple, the increase in iPhone sales is because of iPhone 12. It was released last year (2020) and came with the first big redesign after 2017 with a 5G capability. That’s why people are upgrading their older iPhones to the latest model, and many are also shifting from the Android operating system to iOS.
Global Chip Shortage: The Current Issue
Currently, Apple is facing a very big problem which is the global shortage of chips and several other important components. It has also ensnared all types of organisations, from game console manufacturers and PC makers to automotive corporations.
The Apple CEO warned that the industry-wide shortage of chips would affect the iPhone’s as well as iPad’s sales. It’s important to note that the shortage of chips isn’t related to the high-end processing chips that Apple makes. In fact, it’s related to the chips known as legacy nodes and is used to perform everyday functionalities such as decoding audio, displaying videos.
Mr. Tim Cook also stated that the limitations and shortage of chips that Apple is facing are the same that other companies are experiencing. That’s why it’s classified as a global or industry-wide shortage, and the current demand is also outpacing the company’s own expectations and forecast. It’s difficult for the company to get all the sets of parts and required components within the lead times.
Apple’s Early Announcement
In June 2021, when the Apple quarter was about to end, the company announced publicly that the shortage of chips would affect the company. However, at that time, officials from Apple mentioned that it wouldn’t affect the most important product (iPhone) of the company. Only the supply of Macbooks and iPads will be affected.
Apple also mentioned in April 2021 that the supply constraints due to the chip shortage could lead to a 3-4 billion US dollars drag on the total sales. But the Apple CEO explained in an interview that the company managed to reduce the expected impact.
Shortage of Chips and Apple’s September Quarter
In the latest reports, Apple didn’t provide any exact information regarding the impact of chip shortage which is expected in the company’s September quarter. However, Luca Maestri, Apple’s chief financial officer, explained that the company is expecting a greater impact on its September quarter as compared to the June quarter.
It’s completely safe to say that the shortage of iPhones and other products isn’t going to doom Apple. The company is still expecting a double-digit growth, even more than what is experienced in the September quarter of last year. One thing which is certain is that Apple, with its massive number of customers, operations expert CEO, and prodigious supply chain, is also facing a hard time because of the global shortage of chips. Despite the amazing quarter performance, the company’s share plunged 2 percent within a few hours after releasing the earnings report.
Apple isn’t the only big company that has been affected by the shortage of chips. Ford mentioned that the currency chip crisis could translate into a 20 percent decrease in its first-quarter production. GM (General Motors) also said that it’s planning to increase the downtime at its multiple production plants.
The Global Chip Shortage and Joe Biden’s Bill
As mentioned, the global chip shortage is affecting all types of industries and businesses, ranging from electric vehicles to medical supplies. According to Forrester, a global market research organisation, the industry-wide shortage of chips is expected to last until 2023.
Several industry associations such as Moto and Equipment Manufacturers Association, Advanced Medical Technology Association, Semiconductor Industry Association wrote a letter to President Joe Bide. In this letter, the associations wrote that it’s critical to incentivise and develop new manufacturing plants for semiconductor production. Not only will it help the US to address the current shortage, but it’ll also help the country to compete with other nations effectively.
If you don’t already know, President Joe Biden has already signed a bill in order to address the industry-wide chip shortage. This bill will also help the US to compete with Chinese chip manufacturers. The production of semiconductor chips was greatly affected because of COVID-19. Moreover, a majority of the semiconductor chips of the world are manufactured in Taiwan and China. The lawmakers in the US have warned the government multiple times about the heavy reliance of the country on overseas chip manufacturers.
Biden’s Bill a Bipartisan Efforts
In February 2021, Joe Biden held a meeting with a bipartisan lawmakers’ group. The President said that the meeting was very productive and everyone was on the same page.
In February 2021, President Joe Biden ordered a review of the supply chains in the United States. Moreover, in March 2021, the President passed a bill to allocate 50 billion US dollars in order to help the chip manufacturers in the US. It’s important to note that the US in 1990 used to manufacture 37 percent of the world’s semiconductors. According to the Semiconductor Industry Association, now the US holds only 12 percent of the global semiconductor manufacturing market.
Gina Raimondo is continuously conducting meetings with manufacturers, suppliers, and customers to monitor the performance. She says that the country has already started seeing good signs as the companies have started getting chips, and the situation is getting better. The Biden Admirations says that the country is going in the right direction to fight the semiconductor supply shortage.
Written by The Original PC Doctor on 7/08/2021.