Apple Inc said it was caught off guard by how many people want to buy its biggest smartphone, the iPhone 7 Plus, and the miscalculation might hit profits this holiday season.
The technology leader is not sure it can make as many units of the iPhone 7 Plus as consumers want in time for Christmas, Apple chief executive Tim Cook told analysts on Tuesday.
It would manage to make enough of the smaller iPhone 7s, though, he said.
Demand was strong “particularly on the iPhone 7 Plus versus our forecast going into the product launch,” Cook said.
The bigger phones bring bigger profits and Apple’s forecast for thinner-than-expected margins concerned investors after it reported quarterly earnings on Tuesday.
Apple issued a conservative outlook on margins for the holiday quarter, 38 percent to 38.5 percent, versus expectations of nearly 39 percent, Gradient Investments senior investment analyst and portfolio manager Mariann Montagne said.
“You’re not able to get that product into the hands of the person who wants it right here, right now,” IDC analyst John Jackson said. “Those are dollars not in your hands.”
The Cupertino, California-based company unveiled its newest iPhones on Sept. 7.
The 5.5-inch Plus model is the first iPhone to have a dual camera on the back that lets users take better portrait shots and zoom in from further away.
“It’s inherently tough to know how things like new finishes and features are going to affect demand for a new model,” Jackdaw Research analyst Jan Dawson said.
Apple is still getting to know how consumer interest varies for larger and smaller phones, having launched two competing sizes only in 2014, he said.
The company also might have underestimated the number of customers it would win from Samsung Electronics Co Ltd, which recalled its own large format phone, the Galaxy Note 7, after a number of them caught fire.
Apple chief financial officer Luca Maestri said in an interview it was “impossible to know” the effect of Samsung halting production of the Note 7 earlier this month.
“We cannot fulfill all the demand that is out there right now,” he added.
Speeding up production would be difficult, analysts said.
The company cannot contract new suppliers, hire more workers and open factories overnight, Global Equities Research managing director Trip Chowdhry said.
“You can’t just shoot iPhones out of an assembly line at the speed of a bullet,” Chowdhry said. “Apple does things to perfection. There is no need to rush and create an inferior product the way Samsung did.”
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to