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Published on 25 Jan 2022 on Zacks via Yahoo Finance

Apple's (AAPL) Supply Chain Woes Persist Ahead of Q1 Results


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Apple AAPL is still grappling with supply chain constraints ahead of its first-quarter 2022 results.Per a recent 9to5Mac article, the iPhone maker is still unable to meet demand with accurate supply. The ensemble of new products that the company is supposed to launch in 2022 is complicating the issue further.Apple plans to report earnings on Jan 27. The company has not provided any official guidance for the first quarter due to uncertainty caused by the COVID-19 pandemic disrupting the manufacturing of chips.Chip shortage supply is affecting the newly launched products, including the 14-inch MacBook and the 16-inch MacBook Pro. Delivery of these new products upon order might take up to eight weeks, highlighting the major supply shortage plaguing the company.

New Products With Advanced Chips Complicating Supply Chain Issues

The pandemic-induced chip shortage and supply chain constraints are already costing Apple billions in revenues ($6 billion in fourth-quarter fiscal 2021).The launch of newer products with even more advanced chips and redesigned products without dealing with the already persistent new chip shortage issue is expected to negatively impact Apple’s prospects.The iPhone maker is rumored to launch its first AR headset in the second half of 2022. The rumored AR headset has completed the second phase of prototype testing and is expected to be in production in the second quarter of 2022. The new iPhone models also comprise of the A15 Bionic Chip, which is currently the fastest in the industry. Apple is also speculated to launch AirPods 2 with lossless support. The latest changes include a new form factor design and a charging case that emits a sound for users to track.These products require even more advanced chips and with the ongoing chip supply shortage, it will be worth seeing how Apple produces these products and meets supply accurately.Reportedly, Apple has lowered its iPhone production target for the fourth quarter. Per Investors Business Daily, Mizuho Securities analyst Yasuo Nakane lowered his estimates for iPhone production in the fourth quarter to 90 million units from 95 million — a production decrease of 4% year over year.However, Apple is taking necessary steps like reducing dependency on third-party providers like Intel INTC and Advanced Micro Devices AMD and creating facilities to manufacture its chips in order to address these issues.

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