The Chip Crunch Is Forcing Apple to Cannabilize iPad Production to Build More iPhones: Report

The Chip Crunch Is Forcing Apple to Cannabilize iPad Production to Build More iPhones: Report
Photo: Caitlin McGarry

After Tim Cook told CNBC that the chip crunch likely cost Apple around $US6 ($8) billion in lost sales, it appears Apple has started taking more drastic measures in order to maintain strong production of the iPhone 13 and iPhone 13 Pro.

According to a new report from Nikkei Asia, sources claim Apple has cut the production of iPads by up to 50% over the past two months so that it can use components originally earmarked for iPads to build more iPhone 13s.

While the decision to cut iPad production is certainly not one Apple takes lightly, as iPad sales have risen 6.7% this year per the IDC, Apple is reportedly prioritising iPhone 13 production due to forecasts for “stronger demand” in Western markets as people begin to travel more and restrictions regarding covid-19 start to ease up in various countries.

Also, with sales of iPhones historically maxing out shortly after release (the iPhone 13 went on sale in late September), Apple is almost certainly trying to maintain a steady supply of new iPhones while demand is highest. And with current iPhones and iPads sharing a number of the same base components, it’s easier for Apple to reallocate parts from iPad production rather than trying to source new components from outside or repurpose parts from other devices like AirPods or the Apple Watch.

And with expected shipments of the iPhone 13 slated to be as high as 200 million this year compared to around 50 million for new iPads, it’s not hard to see why Apple might want to prioritise the production of its most popular phone.

However, with Google possibly eyeing a return to the tablet space following the news about Android 12L, Apple may soon be facing some increased competition for the iPad. With delivery dates for many new iPads (particularly those with upgraded storage) including the new iPad Mini having already been pushed back to December, new iPad buyers are already feeling the squeeze caused by Apple’s recent shift in priorities.

Perhaps the bigger impact caused by global supply issues is that after claiming to lose out on $US6 ($8) billion in potential sales last quarter, Tim Cook said the chip crunch could cause even bigger sales woes this quarter, which covers the holiday buying season and is typically Apple’s biggest quarter of the year.