Apple posted record iPhone sales last holiday season, but the end of this year is looking less cheerful. The company reportedly told component suppliers that demand for the iPhone 13 lineup has softened, according to Bloomberg, which cited “people familiar with the matter.”
Apple no longer discloses how many iPhones it sells each quarter, but Bloomberg reported in October that the tech giant cut production by 10 million units due to the ongoing chip shortage. Apple CEO Tim Cook said the company’s Q4 earnings were down $6 billion due to the shortage and the impact of covid-19 on manufacturing.
Apple was reportedly hoping to make up for lost ground next year when supply improved, but the opportunity to do so might be vanishing due to sinking demand. Now the company might be forced to tell suppliers that the sales it was expecting for 2022 could fall short.
Whether this means supply can catch up to demand remains to be seen. Demand may continue to outpace supply, in which case iPhone 13 availability would remain elusive despite fewer people clamoring to get their hands on Apple’s latest phones.
Regardless, Apple’s supply and demand curves are now both trending in the wrong direction. And where supply shortages have predicted end dates–production will eventually go back to normal (2023 is the closest we have to a consensus)–drops in demand, especially around the holiday season, present a more complex issue.
This isn’t the first time Apple has found itself in this position, having rebounded from slowing growth only to set record sales. Even during the pandemic, Apple shattered previous records, posting $89.6 billion for the March 2021 quarter on the back of a 66% increase in iPhone sales (which spiked to $47.9 billion).
We can only postulate what is causing demand for iPhones to decline but it’s safe to say the chip shortage, and the resulting hassle of buying products, is one of those reasons. The iPhone 13 enjoyed a successful launch with Apple enthusiasts forming lengthy lines at physical stores and queuing up to buy online. But while the new devices are excellent, they aren’t much different from the previous models. This drop in demand may partially be caused by people hanging onto their devices for longer while they wait for the next big feature (like USB-C, right Apple?!).
Whatever the case, we expect Apple to rebound once the chip supply is sorted out. And even if iPhone demand continues to slow, Apple is already planning its successor.