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Apple gets hit with chip shortage, starts cannibalizing iPads – reports

Apple gets hit with chip shortage, starts cannibalizing iPads – reports
US tech giant Apple has cut its iPad output by half in order to use semiconductor chips, which are currently in short supply, for its iPhone 13 production, media reports state, citing company sources.

Production of iPads was down 50% from the company’s initial plans for September-October, Nikkei Asia reported. The iPad parts were reallocated for the production of the new iPhone 13, along with chips intended for older versions of the smartphone. Both iPad and iPhone lines share a number of components, including core and peripheral chips.

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According to sources, Apple is betting on stronger demand for the smartphone than for the iPad. The company is also known to prioritize its new releases, and the new iPhone 13 is just out of the box, so to speak, having been released on September 24.

It’s not the first time Apple has placed iPhones ahead of iPads in the pecking order. Last year, the firm moved some iPad parts to the iPhone 12 to support the product amid supply-chain troubles during the Covid-19 pandemic.

However, global demand for the iPad has also recently been on the rise as more people started working and studying from home during lockdowns. According to International Data Corporation (IDC) market research company, Apple has already shipped 40.3 million iPads this year, a 17.83% increase from the same period 12 months ago. On the down side, and presumably due to parts reallocation, consumers currently have to wait for up to six weeks to get a new iPad, according to Apple’s website.

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Earlier reports stated that Apple also plans to slash its iPhone 13 production by as many as 10 million units during the upcoming holiday season from the previous target of 90 million, in order to deal with the growing shortage of semiconductors.

Acknowledging the impact of supply setbacks, Apple CEO Tim Cook recently said that the company’s revenue for July-September came up $6 billion short of expectations due to the “industry-wide silicon shortages and Covid-related manufacturing disruptions.” He added that the impact for the fourth quarter could be even worse.

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