"We estimate the impact from supply constraints will be larger during the December quarter."
What you need to know
- Apple announced its Q4 earnings on Thursday.
- Despite record revenue, Apple missed out on $6 billion because of supply constraints.
- Apple shares are down in pre-market as Tim Cook warned of continued constraints in the holiday season.
Apple shares are down over 3% in pre-market trading, as Tim Cook warned of continued supply constraints across its product range going into the holiday season.
Apple announced record September quarter revenues of $83.4 billion, but estimated that supply constraints cost the company around $6 billion, from Tim Cook:
Sure. If you look at Q4 for a moment, we had about $6 billion in supply constraints, and it affected the iPhone, the iPad and the Mac. We had -- there were two causes of them for Q4. One was the chip shortages that you've heard a lot about from many different companies through the industry. And the second was COVID-related manufacturing disruptions in Southeast Asia. The second of those, the COVID disruptions, have improved materially across October to where we currently are.
As Cook noted, the COVID factor has improved significantly in October, but said that looking forward "we think that the primary cause of supply-chain-related shortages will be the chip shortage." Cook went on to say this would affect "pretty much most of our product" including its best iPhones, Macs, iPads, and more. Cook did however note that the chip shortage was happening on legacy nodes for older devices like the iPhone 12, as opposed to devices like iPhone 13. Constraints are expected to continue, however, as noted by CFO Luca Maestri:
As we mentioned earlier, during the September quarter, supply constraints impacted our revenue by around $6 billion. We estimate the impact from supply constraints will be larger during the December quarter. Despite this challenge, we are seeing high demands for our products and expect to achieve very solid year-over-year revenue growth and to set a new revenue record during the December quarter.
Cook said Apple estimated that constraints in Q1 would be larger than $6 billion, but that this is in part because the holiday quarter is usually Apple's strongest and it gets much more supply overall than it does in Q4.
With demand for new products hotting up and more supply issues on the horizon, the best Apple Black Friday deals are already a great place to find some early discounts and get ahead of the rush this holiday season.
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