Apple can’t secure enough chips to meet surging iPhone demand

Apple It reported booming first-quarter earnings on Thursday and is forecasting growth of up to 16% in the current quarter, matching the period that just ended.

Apple said sales could be even better if the company supplies enough chips to meet customers’ iPhone demands.

“We expect our March quarter total corporate revenue to increase 13% to 16% year over year, reflecting our best estimates of tight iPhone supply during the quarter,” finance chief Kevan Parekh told analysts on Thursday.

On the company’s earnings call, analysts asked CEO Tim Cook several questions about Apple’s access to memory components; Prices for these components have skyrocketed due to demand for chips needed for AI data centers. This caused a lack of memory.

Instead of focusing on memories, Cook focused on rising demand and the company’s thin inventory. What’s keeping Apple from producing more iPhones, he said, is access to advanced node manufacturing for its A-series and M-series chips, which the company calls SoCs, or system-on-chips.

Apple is selling its advanced node chips to Taiwan Semiconductor Manufacturing Co., which dominates the market in leading node manufacturing. produces with. Apple said Thursday that the company is seeking production on its 3-nanometer node.

“The constraints we have are due to the availability of advanced nodes where our SoCs are manufactured, and we are currently seeing less flexibility than usual in the supply chain, in part due to our increased demand,” Cook said.

Cook said Apple was in the process of increasing its supply access and did not want to make predictions beyond March.

Although the supply shortage this quarter is related to advanced node chip production, Cook acknowledged that Apple will be affected by rising memory prices and that the company is looking at “a number of options” for what it can do. But he declined to talk about the details of how Apple is grappling with the AI-driven shortage that has affected nearly every device maker in the world.

“As always, we will look at various options to deal with this,” Cook said.

Apple said it expects gross margins in the March quarter to be between 48% and 49%, which would be a higher gross margin at the midpoint than in the December quarter. Cook said rising memory prices had a “minimal impact” on Apple in the December quarter, but would have a larger impact in the March quarter.

Last year, Apple announced it would spend over $600 billion in the US over five years; The bulk of that spending would go to a handful of companies committed to producing chips in America, including TSMC, which has historically done most of its manufacturing in Taiwan.

On Thursday, Cook said Apple would source 20 billion chips from the United States in 2025, up from the company’s previous target of 19 billion U.S. chips.

WRISTWATCH: Deepwater’s Gene Munster says Apple will use artificial intelligence correctly at the beginning of the story