iPhone 13 Demand Has Weakened, Apple Tells Suppliers Ahead of Holiday Season

Apple is still on track for a record holiday season, with analysts projecting a sales increase of 6 percent to $117.9 billion (roughly Rs. 8,84,055 crore) in the final three months of 2021.

By Debby Wu, Takashi Mochizuki, and Giles Turner, Bloomberg | Updated: 2 December 2021 11:01 IST

iPhone 13 Demand Has Weakened, Apple Tells Suppliers Ahead of Holiday Season

Already, Apple had cut its iPhone 13 production goal for this year by as many as 10 million units

Highlights

Sales for Apple’s main chip supplier TSMC weakened
Shortages and delivery delays have frustrated many consumers
The constraints have hurt Apple partners as well

Apple, suffering from a global supply crunch, is now confronting a different problem: slowing demand.

The company has told its component suppliers that demand for the iPhone 13 lineup has weakened, people familiar with the matter said, signalling that some consumers have decided against trying to get the hard-to-find item.

Already, Apple had cut its iPhone 13 production goal for this year by as many as 10 million units, down from a target of 90 million, because of a lack of parts, Bloomberg News reported. But the hope was to make up much of that shortfall next year — when supply is expected to improve. The company is now informing its vendors that those orders may not materialise, according to the people, who asked not to be identified because the discussions are private.

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The company is still on track for a record holiday season, with analysts projecting a sales increase of 6 percent to $117.9 billion (roughly Rs. 8,84,055 crore) in the final three months of the calendar year. But it won't be the blockbuster quarter that Apple — and Wall Street — had originally envisioned. Shortages and delivery delays have frustrated many consumers. And with inflation and the omicron variant bringing fresh concerns to pandemic-weary shoppers, they may forego some purchases.

That could mean skipping the iPhone 13 altogether and waiting to upgrade next year, when its successor comes out. The current lineup, which starts at $799 (roughly Rs. 59,890) for the standard model and $999 (roughly Rs. 74,890) for the Pro, is considered a modest update from the iPhone 12, which had a whole new design. Bigger changes are expected for the 2022 model, giving some shoppers a reason to wait.

Apple, based in Cupertino, California, declined to comment.

iPhone 13 and iPhone 13 mini First Impressions

The iPhone is Apple's flagship product, accounting for about half of its $365.8 billion (roughly Rs. 27,42,200 crore) in revenue during the last fiscal year, and rolling out upgrades is a delicate dance. With the iPhone 13, Apple and wireless carriers unleashed aggressive rebate programs to spur purchases. In some cases, owners of an iPhone 12 or earlier models were able to buy an iPhone 13 at little to no cost. While discount programs are still available, some offer less dramatic savings than when new models first went on sale.

Unconvinced Consumers

During Apple's last earnings call in October, Chief Executive Officer Tim Cook said that demand for new products was “very robust” — fueled by interest in the latest iPhone handsets, iPad devices, and other devices — and that the company was on track for a record holiday quarter. It had sales of $111.4 billion (roughly Rs. 8,35,100 crore) in the year-earlier period.

He pointed to supply constraints as the company's biggest challenge. Cook predicted that the struggle to get enough components, particularly chips, would cost Apple more than $6 billion (roughly Rs. 44,980 crore) in revenue during the holiday quarter.

The constraints have hurt Apple partners as well. Sales for the company's main chip supplier, Taiwan Semiconductor Manufacturing Co., weakened recently, with October revenue falling 12 percent from the previous month to TWD 134.5 billion (roughly Rs. 36,370 crore).

Last month, Apple's main iPhone assembler, Hon Hai Precision Industry Co., predicted that its business will shrink this quarter from a year earlier — caused by declines in consumer electronics and computing — as it continues to suffer from the chip shortage. On October 24, IQE Plc saw its shares fall 24 percent after it warned of softening smartphone demand, although the semiconductor company didn't name any particular customer.

And there's now more strain on shoppers' pocketbooks. US consumer prices rose last month at the fastest annual pace since 1990. Surging costs for food, gas and housing are eroding purchasing power despite stronger wage growth.

Meanwhile, the iPhone 13 isn't as hard to get as it once was. Apple shoppers in the US had been waiting about a month for the much-prized Pro model to be delivered. Now wait times are down to two weeks or less.

— With assistance from Vlad Savov and Mark Gurman.

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iPhone 13

REVIEW
KEY SPECS
NEWS

Design
Display
Software
Performance
Battery Life
Camera
Value for Money

Good
Great performance
Versatile cameras
Sharp, bright display
Good battery life

Bad
Standard display refresh rate, intrusive notch
Expensive

Read detailed Apple iPhone 13 review

Display 6.10-inch

Processor Apple A15 Bionic

Front Camera 12-megapixel

Rear Camera 12-megapixel + 12-megapixel

Storage 128GB, 256GB, 512GB

OS iOS 15

Resolution 1170x2532 pixels

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iPhone 12

REVIEW
KEY SPECS
NEWS

Design
Display
Software
Performance
Battery Life
Camera
Value for Money

Good
Very good build quality
Dolby Vision HDR video recording
Excellent cameras
Smooth performance in everyday use

Bad
Battery life could be better
Gets warm when stressed

Read detailed Apple iPhone 12 review

Display 6.10-inch

Processor Apple A14 Bionic

Front Camera 12-megapixel

Rear Camera 12-megapixel + 12-megapixel

Storage 64GB

OS iOS 14

Resolution 1170x2532 pixels

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iPhone 13 Pro

REVIEW
KEY SPECS
NEWS

Design
Display
Software
Performance
Battery Life
Camera
Value for Money

Good
Bright, crisp 120Hz display
Excellent construction quality
Good battery life
Great overall performance
Versatile cameras

Bad
Extremely expensive
Bulky and heavy
Display notch in 2021

Read detailed Apple iPhone 13 Pro review

Display 6.10-inch

Processor Apple A15 Bionic

Front Camera 12-megapixel

Rear Camera 12-megapixel + 12-megapixel + 12-megapixel

Storage 128GB, 256GB, 512GB, 1TB

Battery Capacity 3095mAh

OS iOS 15

Resolution 1170x2523 pixels

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