Apple cuts iPad production to feed chips to iPhone 13

Apple cuts iPad production to feed chips to iPhone 13

Apple Inc (AAPL.O) has cut back production of iPad tablets to allocate more components to the iPhone 13, a sign the global chip supply crunch is hitting Apple harder than previously indicated, Nikkei said on Tuesday, citing multiple sources.

Production of the iPad was down half from Apple’s original plans for the past two months, the newspaper said on its website, adding that parts intended for older iPhones were also being switched to the iPhone 13.

Apple has weathered the supply crunch better than many other companies due to its massive purchasing power and long-term supply agreements with chip vendors, eating into its rivals’ market share in the smartphone and tablet space in the third quarter.

However, Apple’s top boss Tim Cook warned the impact of supply constraints will be worse during the current holiday sales quarter and the chip shortage is now affecting most of the company’s products.

The iPhone maker is prioritizing its flagship iPhone 13 output in part because it forecasts stronger demand for the smartphone than for the iPad as Western markets begin to emerge from the pandemic, Nikkei said, citing unidentified sources.

Moreover, a vacuum created by Huawei’s exit from the market has shifted demand to players including Apple in China, which helped the company’s sales in the last quarter. Apple posted a staggering 83% annual sales growth in China during the quarter.

The iPhone business, Apple’s largest, raked in about $192 billion last year. The iPad business, which dominates the tablet space with over a third of global market share, brought in nearly $32 billion.

Apple did not immediately respond to Reuters’ request for comment.