At the Q4 2021 earnings call, Apple CEO Tim Cook and CFO Luca Maestri talked about the impact of supply constraints in the September quarter and its likely impact on the first quarter of 2022, ending in December 2021. In the fourth quarter of 2021, Apple experienced a $6 billion loss due to supply constraints and Mr.Cook expects the impact to be more in the next quarter.
Due to the water shortage in Taiwan and the harsh winter in Texas last year, engulfed industries around the world were in an acute chip shortage. In addition, the COVID-19 pandemic-related lockdowns and restrictions made the situation worse. The prevailing chip shortage is expected to last till mid-2022 which will continue to hamper components supply by the end of 2022. Now, Apple is also expected to face the impact of supply constraints in 2022 like other tech manufacturers.
COVID-19 pandemic and robust demand will have larger supply constraints than $6 billion in Q1, 2022
When asked about the causes of supply constraints and product categories it is impacting, Mr. Cook explained that the COVID-19 pandemic is disrupting the manufacturing of most products in Southeast Asia like Vietnam and India.
Sure. If you look at Q4 for a moment, we had about $6 billion in supply constraints, and it affected the iPhone, the iPad and the Mac. We had — there were two causes of them for Q4.
One was the chip shortages that you’ve heard a lot about from many different companies through the industry. And the second was COVID-related manufacturing disruptions in Southeast Asia. The second of those, the COVID disruptions, have improved materially across October to where we currently are. And so for this quarter, we think that the primary cause of supply-chain-related shortages will be the chip shortage.
Mr. Cook added that high demand for Apple products is the second factor that causes supply constraints and he expects the revenue loss to be higher than $6 billion in the quarter ending in December 2021.
It will affect — it is affecting, I should say, pretty much most of our products currently. But from a demand point of view, demand is very robust. And so part of this is the demand also is very strong. But we believe that by the time we finished the quarter that the constraints will be larger than the $6 billion that we experienced in Q4.
Being more specific, Mr. Maestri said that all products are expected to see revenue growth in the upcoming quarter, except iPad.
Despite this challenge, we are seeing high demand for our products and expect to achieve very solid year-over-year revenue growth and to set a new revenue record during the December quarter.
We expect revenue for each product category to grow on a year-over-year basis, except for iPad, which we expect to decline year-over-year due to supply constraints.
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- iPhone revenue set September quarter record of $38.9 billion with 47% growth in Q4, 2021
- M1 chip drove iPad and Mac record revenue in Q4 2021, despite supply constraints
- Even with $6 billion revenue loss, Apple saw growth across products and services in Q4, 2021