Apple Reduces iPad Production To Bolster iPhone Manufacturing

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Chip shortage triggers sharp reduction in production of Apple iPads, in order to free up chips and components for iPhone 13 portfolio

Apple reportedly has had to resort to drastic measures to ensure it has enough chips and components to continue to manufacture its principle money maker – the iPhone.

According to Asia Nikkei, Apple has drastically trimmed iPad production in order to feed chips to the iPhone 13, and ensure it can still make the smartphone handsets.

Earlier this week, research revealed that Apple had managed to expand iPhone production in spite of the global chip shortage crisis.

Apple iPhone 13 Pro, Pro Max

Chip shortage

Now however Asia Nikkei, citing multiple sources, has reported that Apple produced 50 percent fewer tablets than planned in the September-October period.

The sources also added that parts intended for older iPhones were also being moved to the iPhone 13.

It comes after it was reported last month that Apple was considering slashing production of its iPhone 13 by as much as 10 million units, due to the ongoing global chip shortage.

Apple makes most of its money from iPhone sales ($192bn last year), but the firm has enjoyed healthy revenue streams from iPad sales ($32 billion last year) as well, as the world increasingly purchased tablets for remote working, teleconferences, and to enjoy streaming content during pandemic lockdowns.

Indeed, according to IDC, global shipments of iPads climbed 6.7 percent on the year to 53.2 million devices last year.

Both the iPad and iPhone do have a number of components in common, including both core and peripheral chips.

This permits Apple to shift supplies between different devices in certain cases, Nikkei reported.

Faced with ongoing shortages, Apple is thus prioritising iPhone 13 output because it forecasts stronger demand for the smartphone than for the iPad, as Western markets begin to emerge from the coronavirus pandemic, sources were quoted as saying.

Apple of course released its iPhone 13 portfolio in mid September, and the bulk of sales for the new handsets tends to occur within months of its release, meaning that this is critical period for Apple to ensure it has enough inventory to meet demand.

Prioritising products

According to Nikkei this is not the first time Apple has prioritised iPhones over iPads.

In 2020, it reportedly reallocated some iPad parts to the iPhone 12, to shield its smartphone portfolio from supply chain constraints during the Covid-19 pandemic.

This time around, shoppers are now facing significant wait times for new iPads.

In the Americas or Europe, those who ordered an iPad with 256 GB storage at the end of October will have to wait until 15 December for delivery, according to Apple’s website.

Apple has managed to weather the chip shortage better than some other firms, thanks to huge purchasing power and long-term agreements with suppliers.

However, Apple’s CEO Tim Cook has repeatedly warned about the impact of chip shortages and stressed global supply chains.

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Author: Tom Jowitt
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