Apple Shrugs Off Chip Shortage With Record Revenues

Tech giant surpasses Wall Street predictions, as revenues grow 11 percent despite Omicron variant and ongoing global chip shortage

Apple has shrugged off the ongoing Coronavirus pandemic and global chip shortage to deliver yet another record breaking financial performance.

It posted record sales and profits over the lucrative Christmas holiday period, beating Wall Street expectations and returning nearly $27 billion to its shareholders.

These are the reasons Apple remains the ‘golden child’ in the tech industry for investors, which saw the Cupertino-based firm earlier this month become the first company in the world to briefly surpass the $3 trillion market capitalisation threshold. It is currently valued at $2.6 trillion.

Apple iPhone 13

Record quarter

Digging down into Apple’s first quarter financial results, it is clear the firm remains a hugely profitable company.

For the first quarter ending 25 December, Apple posted a net profit of $34.6bn, up from a net income of $28.7bn in the same year-ago quarter.

There was equally stunning performance for sales, with total revenues during the first quarter reaching $123.9bn, up from $111.4bn a year earlier.

This is much higher than analyst average estimates of $118.7bn in revenues.

  • The iPhone remains Apple’s principle cash cow, bringing in $71.6bn in revenues;
  • Mac sales reached $10.8bn;
  • iPad sales declined a bit as Apple scaled iPad production back to bolster iPhone manufacturing, but it still posted revenues of $7.2bn;
  • Wearables, home and Accessories were up to $14.7bn;
  • Lastly Services rose to $19.5bn.

Geographically Apple experienced in all markets, including the Americas and Europe, although sales in Japan declined slightly.

However Apple performed well in China, bringing in $25.7bn, up from $21.3bn a year earlier.

Executives have attributed the strong quarter to the success of its products, coupled with the usual strong performance over the Christmas holiday period.

Apple was also helped after it also launched several new products last Autumn, including new models of the Apple Watch, iPad, MacBook Pro computer and AirPods.

Chip shortage

“This quarter’s record results were made possible by our most innovative lineup of products and services ever,” said Tim Cook, Apple’s CEO, who earlier this week was granted a restraining order against an alleged stalker.

“We are gratified to see the response from customers around the world at a time when staying connected has never been more important,” said Cook.

Apple chief executive Tim Cook at WWDC 2020. Image credit: Apple
Apple chief executive Tim Cook at WWDC 2020. Image credit: Apple

“We are doing all we can to help build a better world – making progress toward our goal of becoming carbon neutral across our supply chain and products by 2030, and pushing forward with our work in education and racial equity and justice” said Cook.

There is little doubt that Apple was forced to flex its supply chain muscle during the quarter and used its enormous buying power to ensure it was able to source enough semiconductors.

That said, it is estimated that chip shortages actually cost Apple over $6 billion in sales over the holiday quarter.