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Apple Manages To Evade Global Supply Chain Clogs, But Other Firms May Continue To Face Challenges

Apple Manages To Evade Global Supply Chain Clogs, But Other Firms May Continue To Face Challenges
The ease with which iPhone maker Apple Inc. managed to tide over the issues in the global chip supply chain has also brought some good news for the struggling markets all around the globe.
Analysts however argue that this isn't the case.
The iPhone maker, which warned three months ago that supply concern might hurt its revenues for the holiday quarter, reported record earnings on Thursday, which was mostly driven by revenues generated from the sale of its premium phones. The company however also sees the situation in the global supply chain improving somewhat, albeit there are still some shortages.
"Most of the supply-constrained issues are over for Apple, but not necessarily for everybody else," said Bob O'Donnell, chief analyst at TECHnalysis Research.
Concerns over the current issues plaguing the global supply chains, which have plagued multiple industries, will continue to hinder production throughout the current year, according to warnings from companies ranging from American electric vehicle maker Tesla Inc to wafer fabrication equipment provider Lam Research.
However, some of the larger players, such as Apple, are accorded preferential treatment by semiconductor makers because of their vast purchasing power, high demand for their products, and capacity to place special orders for components utilized in their products. Apple's high-end CPUs are also expensive, which attracts chip producers.
This effectively means Apple has a competitive advantage over smaller companies and is, therefore, able to obtain components more quickly than many of its competitors.
While Apple, like many companies, received better service for more complex and specialized chips, it had issues with some of the chips that are made with older technology, according to Daiwa Capital Markets analyst Lou Miscioscia.
Semiconductor processors that are used in Apple iPads, which witnessed a 14 per cent decline in revenue in the fourth quarter, use chips manufactured using older technology, and supplies of those older technology chips were particularly scarce, according to Apple CEO Tim Cook.
During the Christmas quarter, Cook said, the limits on the older technology chips, or nodes, were particularly substantial.
"Overall, we see an improvement in the March quarter in terms of limitations decreasing compared to the December quarter," he said.
Earlier this week, indications that supply chain issues would reduce production output in all of the company's factories were made by Tesla CEO Elon Musk. "As a result, while the chip scarcity is better than last year, it is still a problem," he told analysts.
New supply issues have been identified by Lam Research, with the Omicron spike causing even more interruption to freight and logistical operations. A few weeks into 2022, the corporation reported that some components and parts, particularly semiconductors, were in short supply.
Analysts and market leaders in the semiconductor industry predicted that supply difficulties would be resolved by the end of the year.
"That's going to remain a concern for the industry, but Apple may be the exception to the rule," said Romeo Alvarez, technology analyst at William O'Neil + Co.

Christopher J. Mitchell

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