Apple Inc said it expects supply constraints would cost US$4 billion to US$8 billion in revenue this quarter, a warning that sent the shares tumbling and cast a pall on record-setting results that the company just reported.
COVID-19 pandemic restrictions that have been implemented China in the past few weeks will take a toll on the April-to-June quarter, Apple said during a conference call on Thursday.
The fiscal second quarter’s sales and profit had topped analysts’ estimates, fueled by strong demand for iPhones and digital services, and the company announced US$90 billion in new stock buybacks.
The outlook renewed fears that supply-chain woes would continue to roil the tech industry following a short-lived recovery from pandemic struggles.
Companies ranging from Microsoft Corp to Texas Instruments Inc have already said that China’s COVID-19 lockdowns would crimp sales and make it harder to produce products such as the Xbox.
The administration of Chinese President Xi Jinping (習近平) has embraced a “COVID-19 zero” policy, with the effects of restrictions reverberating through the world’s supply lines.
Chip shortages and the Ukraine war also are causing disruptions, Apple chief executive officer Tim Cook said during the call.
“We are not immune to these challenges, but we have great confidence in our teams, and our products and services, and in our strategy,” Cook said.
Apple shares tumbled as much as 6.2 percent to US$153.50 in late trading after the remarks.
The stock had already fallen about 7.8 percent this year before the company gave the warning, hurt by a broader tech downturn. Apple had gained 34 percent last year, its third straight year of increases.
The latest supply woes did not begin until the very end of last month, so last quarter was not affected, Apple said.
Sales rose 8.6 percent to US$97.3 billion in the period, a record for a non-holiday quarter, Apple said earlier on Thursday.
Analysts had projected US$94 billion on average.
Profit came in at US$1.52 per share, compared with a prediction of US$1.42, initially sending the shares up in late trading.
Apple had previously said the January-to-March quarter would be a record, although its growth rate would decelerate for the overall business and its services segment.
The company’s fourth quarter last year was a blowout sales period, exceeding Wall Street estimates with an all-time revenue high of nearly US$124 billion.
Following its usual pattern, Apple used the company’s second-quarter report to increase its dividend and boost stock repurchases. The dividend is to grow 5 percent to US$0.23 per share.
The Cupertino, California-based company said that China’s COVID-19 restrictions also have affected demand in that country, but that broader demand has been strong.
It said that it is contending with increasing inflation and a pullout from Russia following that country’s invasion of Ukraine.
Analysts are projecting third-quarter revenue of about US$86 billion.
In the fiscal second quarter, which ended on March 26, Apple generated US$50.6 billion from the iPhone, its biggest source of revenue. That compared with an average estimate of US$49.2 billion.
The company launched the low-cost iPhone SE last month, contributing to sales in the first quarter.
However, the flagship iPhone 13 might have been less of a draw than the previous year’s iPhone 12, which was more of a dramatic update.
The iPhone 13 retained the earlier model’s design, with some minor upgrades that focused on camera improvements.
The Mac continued its resurgence, generating revenue of US$10.4 billion in the quarter.
Apple launched the high-powered Mac Studio desktop in the quarter, but many orders of that machine have been delayed due to supply chain shortages, customization time and high demand.
The strong Mac sales are likely primarily due to the new MacBook Pros.
This week’s undoing of the TerraUSD algorithmic stablecoin and its sister token, Luna, has ramifications for all of crypto. First, there is the immediate impact: The rapid collapse of a once-popular pair of cryptocurrencies sent a ripple effect across the industry, contributing to plummeting coin prices that wiped hundreds of billions of market value from the digital-asset market and stoked worries over the potential fragility of digital-asset ventures. Then there are the knock-on effects. In addition to delivering punishing losses to individual users and investment firms, the spectacular failure of a market darling like Terra threatens to have a cooling effect
China’s biggest chipmaker has cut its outlook for the second quarter, joining a growing list of manufacturers warning about the fallout from lockdowns aimed at containing the country’s worst COVID-19 outbreak in two years. Semiconductor Manufacturing International Co (SMIC, 中芯) estimates a month-long lockdown in Shanghai could spur component shortages and logistics tangles, and erase about 5 percent of its output in the second quarter. “We are trying our best to mitigate the impact on product delivery,” SMIC Chairman Gao Yonggang (高永崗) told analysts on a call yesterday morning. “We are still assessing the actual impact as many suppliers restart their
DISRUPTIONS: The war in Ukraine, China’s lockdown measures, rising interest rates and inflation have thrown a wrench into business plans made years in advance Samsung Electronics Co is talking with foundry clients about charging as much as 20 percent more for making semiconductors this year, joining an industry-wide push to hike prices to cover rising costs of materials and logistics. Contract-based chip prices are likely to rise around 15 percent to 20 percent, depending upon the level of sophistication, people familiar with the matter said. Chips produced on legacy nodes would face bigger price hikes, while new pricing would be applied from the second half of this year, they said, adding that Samsung has finished negotiating with some clients and is in discussions with others. Samsung’s decision
material SHORTAGE: Even as workers are about to return, Quanta lacks operating supplies, while Pegatron reported its lowest revenues in 11 quarters, the companies said Taiwan’s major Apple Inc supplier cut its outlook for the second quarter, joining a growing list of manufacturers warning about the fallout from lockdowns aimed at containing China’s worst COVID-19 outbreak in two years. Quanta Computer Inc (廣達電腦), which assembles MacBooks, expects a 20 percent quarterly fall in notebook shipments and a squeeze on margins this quarter due to the lockdown, a company representative said on Friday during an earnings call. The impact from supply chain disruptions could last until the end of the year, she said. The company’s Shanghai factory has been operating under tight restrictions since the middle of last month,