Nikkei Asia reported that the factories run by Apple‘s suppliers—specifically for the iPhone and iPad—have halted production “for several days” in October. This meant that the factory workers got time off, instead of normally going into overtime to meet the global demand during the holiday season.
“Due to limited components and chips, it made no sense to work overtime on holidays and give extra pay for front-line workers… That has never happened before. The Chinese golden holiday in the past was always the most hustling time when all of the assemblers were gearing up for production.” said a supply chain manager to Nikkei Asia.
The iPhone and iPad assembly was halted for several days due to supply chain constraints and restrictions on the use of power in China. But it was also due to the lockdown measures in Malaysia and Vietnam—besides other factors. Malaysia plays a pivotal role in chip packaging and testing, while Vietnam produces the iPhone’s camera modules.
“Even if you have 99% of the components ready on hand, if you lack one or two or three components, it is not possible to kick off the final assembly of the product,” said an executive at a top Apple supplier.
Through September and October, the reallocation of the shared components squeezed iPad’s assembly to about 50% less production volume than planned. And the production forecast for older generations of iPhones also dropped around 25%.
Because of falling behind on production to meet demands, Apple is likely to fall short in its production goals and will be missing out on billions of dollars of revenue. In many countries, it is now too late for consumers to buy some Apple products in time for Christmas gifts.
Apple announced in early December that it planned to produce 83 million to 85 million iPhone 13 units by the end of the year, falling short of the ambitious goal of up to 95 million units it had set previously. And despite resuming production in November, Apple was still around 15 million devices short of its goal of manufacturing 230 million iPhones this year.
When it comes to production troubles, Apple isn’t alone. There have been issues for other device companies like Samsung, Xiaomi, Oppo, PC makers like HP, Dell, Acer, and game console makers Sony and Nintendo. Nikkei reports that the companies have all “been unable to produce enough products and deliver them in time for the year-end holiday season”.
