Apple supplier Foxconn today said that it expects shipments to be cut by 10 percent due to the global chip shortage, reports Nikkei. In an earnings call, Foxconn chairman Young Liu said that the first two months of the quarter were okay, but the company “started to see changes happening this month.”
Foxconn did not mention Apple specifically, but it is a major Apple supplier and this perhaps suggests that the ongoing chip shortage will ultimately impact Apple. Foxconn is responsible for much of the assembly of Apple’s iPhone models, but it does work with other companies like Google and Microsoft.
Apple has more resources than many other smaller companies that have already been hit by chip shortages, but it could run into trouble sourcing supplies for upcoming devices as the chip issues continue. Foxconn expects the shortage to extend into the second quarter of 2022.
Foxconn will ship 10 percent fewer products than planned, but “the impact on the orders that were secured a long time ago is rather limited,” so it’s not clear if and when Apple might be affected.
The ongoing chip shortage was caused by supply chain issues that arose during the global health crisis and weather-related events like the freeze in Texas that shut down Austin chip plants. As chip factories struggled to keep up with standard outputs during the pandemic, demand surged as people purchased devices for an at-home lifestyle, leading to higher prices. Electronics companies bought up all available supply, and chip makers are running at capacity.
With manufacturing capabilities limited, chip makers have focused on higher-end chips for smartphones and game consoles rather than the more affordable, less-advanced and less profitable chips used for everyday devices such as cars.
Because of this focus on higher-end manufacturing, the car industry has been most heavily impacted so far, and manufacturers like General Motors and Ford have had to slash production, but major tech companies could also be affected going forward.