Analyst: Chip shortages may make Apple and AMD prioritise higher-margin products

In the morning news on July 29, it was reported that analysts and business executives said that the global chip shortage has caused huge problems for automakers, causing many car factories to suspend production. In addition, the chip shortage has forced tech giants to become more flexible, using their existing supply of chips to make their most profitable products.

Apple said on Tuesday that chip shortages primarily affected production of the company’s iPad and Mac products during the last quarter, but starting this quarter, shortages will begin to affect its most important iPhone business, Apple’s most important smartphone business. Best-selling products are also the company’s main profit driver.

Apple CEO Tim Cook said on the earnings call: “We will do everything we can to mitigate the various situations that we face.”

Apple has traditionally managed its supply chain skillfully by entering into long-term supply deals with two chipmakers, Broadcom and Qualcomm. At present, Apple also has to deal with the impact of chip shortages. In the second half of this year, the company will usher in a double-day holiday sales peak. According to previous years, Apple can sell millions of brand-new units during this peak sales period. Flagship phone.

Some analysts believe that Apple may prioritize chips for new phone production in the third quarter, which runs from July to September, which is typically the slowest quarter for iPhone sales as consumers rush to make new phones. Waiting for new models to be released soon.

“I think it largely reflects the timing of new product launches, especially in relation to the new iPhone launch in September,” CFRA analyst Angelo Zino said of Apple’s warning. time.”

He also said that even under normal circumstances, “it is common for new phones to experience supply constraints when they are just starting production, given the high demand ahead of the holiday selling season.”

Jeff Fieldhack, research director at Counterpoint Research, said that even in Apple’s current product lineup, the company could shift supply chain pain to the least profitable products, prioritizing high-margin production products, temporarily abandoning products with lower profit margins.

Moreover, Apple’s smartphones can also bring other receivables, such as paid subscription services, and accessories such as AirPods.

“Join Apple in prioritizing production of the iPhone 12 series, and its production of iPads, Macs and older iPhones will be affected even more,” Fieldhack said.

The global chip shortage is the result of a combination of factors, including the fallout from the outbreak last year and factories struggling to keep up with demand for semiconductors. In today’s increasingly digital world, semiconductors have become ubiquitous.

The severe shortage of chips has had a huge impact on the auto industry and caught many automakers off guard. Companies such as Ford and General Motors were forced to discontinue some models, including their most popular pickup trucks. At this time, the world economy is recovering, and consumer demand for cars is surging. So automakers faced an awkward situation: Consumers wanted to buy new cars, but automakers couldn’t produce enough new cars because of chip shortages.

The chips used in the auto industry are basically all from a few chip makers, including TSMC and South Korea’s Samsung Electronics. Chip shortages have exposed automakers’ reliance on overseas suppliers, which has become an Achilles’ heel for many.

Technology companies, as traditional big consumers of semiconductors, also have to become more flexible.

Chip designer AMD is also redirecting its chip supply. The company intends to manufacture central processing units for personal computers and data center servers.

The move comes after Intel released a new line of chips that outperform products from larger rival Intel. AMD’s sales have been rising steadily over the past period, and the company has been eroding Intel’s market share, which currently holds more than 80% of the overall market.

Dean McCarron, an analyst at Mercury Research, a research firm that tracks market share among chipmakers, said AMD responded to the lack of chip supply by focusing only on selling its most profitable chips. chips, leaving the low-end market to Intel.

Intel has faced production challenges of its own in recent years, causing its new products to lag behind rivals like AMD and Nvidia.

AMD CEO Lisa Su told investors on a conference call: “We are focusing on the most strategic segment of the PC market. We believe that the data center business will continue to be our priority as we enter the second half of the year. strong impetus.”

The Links:   SKIM304GD12T4D NL6448BC18-06F

Related Posts