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Apple Set to Cut iPhone Production Goals Due to Chip Crunch (bloomberg.com)
81 points by gardaani 4 days ago | hide | past | favorite | 99 comments

Does anyone have any data on how much of this is actually due to the chip crunch versus reduced demand (especially at current iPhone 13 price points)?

For business/enterprise, one effect of the pandemic WFH response has been suppressing tech refresh of cellphones at many large employers -- folks aren't traveling as much for business. I know leisure travel is getting back up to pre-pandemic times domestically in the US, but internationally it's still down overall, so maybe the average consumer use case for a new shiny iPhone is down as well? Also, annoyingly, Apple hasn't reintroduced fingerprint scanners (TouchID) to their phones like some others have, while at the same time FaceID continues not to work with face masks on. These and other anecdotes make me question whether this is cover for decreased demand, or at least decreased demand forecasts.

> Also, annoyingly, Apple hasn't reintroduced fingerprint scanners (TouchID) to their phones like some others have, while at the same time FaceID continues not to work with face masks on.

It seems that manufacturers are hesitant to include both for some reason, and in this (false?) dichotomy I would still prefer IR-based face unlock over fingerprint-based unlock. Facial recognition is admittedly inconvenient in a period of mask-wearing while in public (precisely when phone locks and efficient unlocking seem most beneficial IMO), but for all of the times when I'm not wearing a mask, I definitely much prefer it over fingerprint scanners for the invariance to hand position and environmental elements. Fingers that are either wet or overly dry seem to trip up scanners in my experience, and needing to touch the phone can be inconvenient in and of itself while cooking, wearing gloves, etc.

Except when I can unlock my iPhone 7 when it's lying down on the table away from me, by touching the home button, without the need to be facing it head-on, to be in the FaceID sensor's field of view.

I know the advantages of Faceid, but for me it's more of a step back in many ways and it's not like Apple couldn't have put the touchId sensor behind the screen like every Android phone has been doing it for the last 4 years or so.

It's absurd that the devices they make you have to sit in front of to use, the laptops and iMac have TouchID yet the devices you can use laying beside you in bed, on a table or rotated have FaceID.

Sure, I definitely agree that these situations can be problems. As a counterpoint, as in my GP comment, the devices with FaceID are also the ones at which I'm least likely to have clean and available hands. For instance, I might be cooking with hands covered in wet dough, I might be wearing gloves due to the cold, my hands might be wet from rain, or my hands might be dry due in part to winter.

How good are those under-the-display sensors from a security standpoint? If Apple had a blunder like that Samsung fingerprint reader that was fooled by a gel phone case they'd never live it down, meanwhile nobody really cares about the security level of Android phones (IIRC there are no Android phones with an actually secure face unlock, the random spot IR blaster is one reason that Apple can't get rid of the notch like Android phones can)

This is fair. I doubt most Android phone's fingerprint sensor isn't secure as iPhone. Still Apple sell iPad and MacBook with TouchID so they can implement them for iPhone without degrading security.

The current iPhone SE (2nd generation, 2020) has TouchID, so there doesn't seem to be a higher threshold of biometric security required by Apple as compared to similar Android brands. There are also Android phones that still offer standard (not in-display) fingerprint sensors.

Yeah there should be nothing (but cost/supply) prohibiting them from implementing the power button touch sensor that the iPads have.

The Pixel 4 has actual IR-based facial recognition, which is why it has a top bezel. I’m indifferent between that and the notch chosen by Apple, having owned both.

It makes sense that Google would bother to do it right! Thanks for the correction.

Certainly. As I said, it seems like a false dichotomy perhaps dictated by cost, and Android manufacturers are also guilty of this in transitioning to fingerprints only (in-display or otherwise) on many newer models.

Both is hit and miss, but in current pandemic situation, lack of auth method without unwearing mask in new 2021 phone is a serious defeat. (Technically buying Apple Watch is an option, but wear and charge everyday for just auth?) As a asian, I argue that Apple is now enemy for publich health. It's good to have both.

It's that but it's also that their phones are only seeing incremental updates. I bought a iPhone 11 Pro Max almost 2 years ago, when the 12 came out I looked at it and decided to skip the upgrade, my 11 was almost identical. Now that the 13 is out I'm saying the same thing, skip to the next one because there aren't enough changes.

I think the "keep your phone for 2 years" is a thing of the past now. Back in the late 2000's and 2010's I remember when phones made massive leaps every year. The iPhone 3G was awesome until the 3GS came along and blew it out of the water, when the iPhone 4 came out it blew the 3GS out of the water. Back then upgrading to new devices carried some major benefits. The 3GS wasn't just "faster" than the "3G", it was very noticeably faster.

Nowdays thought, I can pick up a iPhone 13 and compare it to my iPhone 11. The 13 has better cameras, better battery life, and is more powerful. But it's not 3G -> 3GS powerful, when I picked up a 3GS for the first time I was blown away how much better it was than my 3G. When I looked at the iPhone 13 the other day I was hard pressed to find areas where it was better than my iPhone 11.

That's exactly the boat I'm in now. I really, really want an iPhone 13 mini because I'm tired of the big ass XS. But other than a more reasonably-sized phone, what do I get? Better cameras? Is that worth the $800? Is that worth giving up the nice, pricey Official Apple Leather Wallet Case(tm) for the XS that's just now getting a little worn in? I don't need a faster processor. More battery life would be nice, but not critical. As much as I try to talk myself into it, I just can't tell myself that the iPhone 13 will do $SOMETHING so much better than my current phone that it is worth upgrading.

A lot of it has to do with the points _fat_santa brings up, and the points I laid out above, but a lot of it also probably has to do with the fact that I'm kinda over phones, too.

I'm still on a Nokia 6.1, it still does everything I want in a phone and still gets security updates.

£160 for 3 years is a good deal.

Most phone companies take care cameras too much but not for other specs. That's why I jumped to Galaxy Z Fold3. Big screen on my pocket is drastic improvement in a decade.

And iPhones get software updates for a really long time. The original SE can upgrade to iOS 15 for example.

I suspect that Broadcom is the issue and people are just covering their ass by mentioning TI.

TI owns fabs. They can prioritize Apple if they want and Apple would be throwing money at them to do so.

Broadcom doesn't own fabs and the AFEM is very unique in packaging as well as fabrication. That's likely to be the bottleneck.

However, here is the list of chips in the iPhone 13: https://www.ifixit.com/Guide/iPhone+13+Pro+Full+Chip+ID/1449...

The chips that are most likely to snag would be anything from a fabless company on an advanced node.

For Broadcom/LSI raid controllers, we were told 52 week lead time. Broadcom is definitely having issues

> (especially at current iPhone 13 price points)?

iPhone prices have been fairly steady for the "regular" models:

* https://www.gsmarena.com/price_history_of_apples_iphones-new...

Apple did introduce 'flagship' models with the iPhone X, but the same year they also had the iPhone 8 which was on the same trend line as the iPhones 4S to 7.

And to speak of the "iPhone 13" is kind of vague: you have the 13 mini 128GB at US$ 700, and the 13 Pro Max 1TB at $1600. On introduction, the 3G 16GB was $700 and the 4S 64GB was $850:

* http://www.asymco.com/2021/09/21/the-most-important-iphone-e...

Also worth remembering that depending on how you value inflation, $700 in 2008 when the iPhone 3G launched is somewhat over $800 now.

A more interesting question to me would be how the average buyer's cellular plan has shifted over that time — people tend to focus on the phone prices but not the greater monthly service charges.

Countered with the deflation of getting more capabilities for the dollar. Even a current lower-tier iPhone is much more capable than many flagships from a few years ago—never mind things that weren't even dreamt of, like 1TB of storage.

What enterprises order the latest flagship day and date of release in bulk without even going through IT department evaluation and test? My company, blue chip finance, currently issues the SE which does have a fingerprint scanner, so they do still offer that option.

> day and date of release

Doesn't have to be day and date of release for apple to learn that they don't want to upgrade.

Most enterprise customers have customer management teams at apple and like, so they can easily learn that company [x,y,z] may not buy full fleet upgrades (or even partial fleet) and downscale manufacturing.

I bet that chip fab costs are high right now. If apple knows they can slow production down until next spring, they may chose to do that to save money.

Most of them?

Without any lag at all for IT department test and certification? No, and generally if you want a flagship you get it on BYOD terms because at that level people have different preferences for form factor and features.

Anyway the long wait times for devices make it pretty obvious this is a supply issue, not a demand issue.

What value is "certification" from random IT of apple or samsung devices? Pure CYA.

Totally, it certainly wouldn't have anything to do with verifying all the apps required by the business still work correctly and updating helpdesk documentation for tech illiterate user support.

All the companies I have been at allowed their employees to get the latest iPhone as a work phone when they were released. The IT department had no say in that.

At senior level you can sometimes buy it BYOD and expense it, but the market dynamics of that are the same as personal purchases and people will get whatever specific model they prefer. That's very different from enterprise IT department and fleet phone ordering, which is where the real numbers are.

Real numbers…of iPhones? No, the real numbers are what people buy for themselves.

I don't have numbers but while maybe in the SV bubble iPhones are given to employees en masse, the more typical pattern is people just buy their own phones and the company may reimburse some amount of monthly mobile fees.

I worked for a company that had management performance bonuses linked to moving 90%+ of users from firm supplied handset and plans onto byod.

I work at an MSP that acts "IT department" for the SME segment. We also sell phones, laptops, desktops and peripherals. Our customers always get iPhones, the seniors always gets the latest and greatest iPhone.

This is in Sweden where we're taxed about 50% (I make 50% of what my employer pays for me), this might make us give away iPhones to employees like it's nothing.

Think of this: Employment tax, 30%, income tax 30%, value added tax for goods, 25%.

My employer doesn't have to pay either of these, but if I were to buy an iPhone I'd have to pay all of it. I imagine this affects how generous our employers are giving us "tax free perks".

I had to argue the case with my boss(CEO) to get a cheaper phone since I break them quite often and felt shameful bringing the bills in for repairs.

Now that I'm changing jobs my new employer asked "what gear do you want", I could get essentially whatever I wanted. Seems like a kitted System76 laptop and a Fairphone 4, is what I'll stick with.

TL;DR: Tax affects who gets what in what way.

Similar in Australia with salary sacrifice tax breaks for buying mobile phones and laptops 'primarily for work purposes'

The reports right before the 13 was announced was that Apple had significantly increased manufacturing orders anticipating strong lost-pandemic iPhone demand. But we’re still in a pandemic. I barely need a phone given how little I leave my own house.

I’d love to think the CSAM topic is relevant to this — as I’ve paused my own Apple upgrades (had intended on getting new phones, new iPads, and new MacBooks for the whole family), but there’s been radio silence on the topic since they announced their delay on that.

That seems like it would be difficult data to gather. Reduced availability certainly can reduce demand by itself, somebody might give up if the thing isn't available after a while. I, for instance, would love to upgrade if I could get ahold of one of the things. If I still can't walk into a store and get one two months from now then I'll just wait it out another generation.

> FaceID continues not to work with face masks on

Well.... it does if you have an apple watch. I would still rather have a touch id option though.

Given the long wait times for these things I think it's pretty clear this is a supply issue, not a demand issue.

As for touch authentication, there's still the SE so at least they still have that as an option in the lineup. The thing is they begin the design outline for new iPhones from 24 to 18 months in advance of launch. Even a 2 year pandemic is a temporary issue relative to the iPhone design cycle, and any design response they might make to it would only show up towards the end of the crisis anyway.

Given the long wait times for these things I think it's pretty clear this is a supply issue, not a demand issue.

As for touch authentication, there's still the SE so at least they still have that as an option in the lineup. The thing is they begin the design outline for new iPhones from 24 to 18 months in advance of launch. Even a 2 year pandemic is a temporary issue relative to the iPhone design cycle, and any design response they might make to it would only show up towards the end of the crisis anyway.

Even if they had brought out a pandemic influenced flagship design now, which is probably the earliest point possible, for how much of that device's lifetime would mask mandates be relevant? Here in the UK mask mandates are already on the way out thanks to high vaccine uptake.

And/or maybe the word of Apple forcibly scanning your photos and lodging a complaint against yourself at the police*, did really spread through the would-be buyers. Who know what pulls demand and offer, but Apple has always aimed to have select customers among the mass market.

* Yes, I know, only with iCloud enabled, and it nags you until you enable it.

And they did not launch that program only proposed it.

I wish the major phone manufacturers would abandon the yearly release cycle for new models - it makes everything so much more boring and predictable.

Not that it's ever gonna happen.

You aren’t meant to care about every single release. You just get one after x years and it becomes a big jump. Yearly releases mean that it’s never a bad time to buy. The one that comes out next year won’t obsolete the one from this year.

If you had it on 3 year cycles, the first year would be a good year to buy, the second year would be ok, and the 3rd year would be a bad time to buy. And if another OEM released something that year, everyone who wanted to buy on year three would go with them since they have the best offering of that year.

>You aren’t meant to care about every single release.

I suspect a lot of people do which is why they release on this schedule.

Automobiles are also on an annual cycle. Do you think most people buy/lease a new car every year--especially given that something like 11 years is the average length of time people hold onto their cars these days?

Even with trade-in incentives, the vast majority of people don't get a new phone every year.

Cars are nominally on an annual year cycle but many models go relatively unchanged for a generation which could be 5 years or more.

It is the same for iPhone. They even sell brand new phones that originally came out 5 years ago (SE).

I think they would if they could. The allure of the new shiny toy is strong.

Americans buy a new phone every 24 weeks though, so an annual release schedule makes sense even if they don't buy every year.

24 months in the US was historically driven by cellular carrier subsidies. I suspect it's increased since that is no longer as big a factor.

I think you mean every 24 months.

Source? I see lots of people using older iPhones, and even amongst the rich demographic I hang around, no one cares about new iPhones since at least a few years ago.

They simply do not change in a way that affects most people’s lives.

I’m wondering, do you share this frustration with car manufacturers?

Each new car is incrementally a small upgrade, but accumulated over a few years, makes for a worthy improvement. Those incremental upgrades I don’t buy don’t make anything worse for me.

That’s not really true. Model year changes come in 3 forms: new generations which are pretty big changes and happen about every 6-7 years, facelifts which happen once per generation and are usually just aesthetic changes, and minor years where they only fix usually pretty minor issues.

It’s not a set of incremental upgrades each year that eventually get to something new. The only time things change significantly is with new generations.

Within that analogy the iPhone X could be considered a new model, the 12 it’s facelift and every other post-X iPhone a minor issue release.

The difference, I think, is that your car can still run on today's gas. The update cycle for modern electronics is planned obsolescence and therefore forces you to participate in the incremental updates. If you don't, eventually all your favorite software will stop working, especially if it is cloud connected.

It's probably worth discussing the reasoning behind a statement like this. I don't pay attention to low-end Android phones - maybe they really do this to you. But it seems really unlikely.

Do you have examples?

I know many people complain about battery degradation. But really, these phones are using about the most advanced batteries that are available in the relevant price range. They are degrading because you are using the device a lot. You really are. Are there any credible claims that batteries are degrading faster than "normal" given usage patterns?

This is a common claim but I rarely see it supported. My iPhone 6S from 2015 is fully supported by iOS 15[1]. I know plenty of people whose cars had day 1 drawbacks in the on-board software which were never fixed (or required paid upgrades in the $500+ range) — and that includes things like “the entertainment system will crash every time you connect your phone because you have more than a small number of songs / contacts” — and most people I know who own cars upgrade them more frequently than every 6 years.

1. https://support.apple.com/guide/iphone/supported-models-iphe...

Your car still runs on gas and your phone still runs on electricity.

I think this statement is overly generous to car manufacturers, who rarely provide software updates. Is that not motivated by an analogous planned obsolescence?

Cars are not something anyone would buy every year. Even those buying every other year are few.

Not that I like the amount of resources we are wasting that way, but a whole lot of people buy a new version smartphone every year.

Do they? Anecdotally I can only think of a tiny handful of people I've known that buy the latest model every year. Most people I know used to buy every 2 years when smartphones first came out but now it seems like most people I know buy a new phone probably average 3 years or longer.

I have to say this really surprises me, smartphones now are so good that you could easily keep one for 2 years or more and not notice the difference.

My personal cycle is about 4 years, and I do my best to take care of the battery so that I don't even have to replace that during that time.

> Even those buying every other year are few.

I think this is true but for the opposite reason you do. The number is few because most people upgrade _less_ often, not more.

I think multiple releases per year would be even less interesting as there would be much less to look forward to. I think phones have almost approached their final form, a slab of glass. The next 'innovation' could be a really good, thin folding model without a noticeable crease.

I don't use my phone that much so I can't think of important, game-changing things I would like to see besides unrealistic battery-life expectations.

I'd love it if manufacturers could go back to try to make mobile phones smaller again, at least for those with smaller hands (like me). It's almost impossible to find a feature phone that I can use with one hand and reach everywhere with my thumb. Latest phone is a iPhone 12 Mini, but CarPlay is so horrible (and important for me) that I'm looking for a good Android phone again (Android Auto is miles ahead of CarPlay), with the same size and good performance. But it's really hard to find good ones.

Apparently the mini versions of the iPhone sold poorly enough that they won't produce a mini version of the iPhone 14, and instead will push the SE as their small sized phone.

At this point, backing Kickstarter projects is likely the only way to get a small phone made.

Same here, and now that my Sony Xperia Compact is now on life support, I will have to switch to iPhone. There is no Android phone maker left that produces something between the ultra-small Atom and what used to be called phablets.

And even Apple seems to have a hard time selling smaller phones.

> ... I can't think of important, game-changing things I would like to see besides unrealistic battery-life expectations.

I'd like to see a satellite connection, ideally with gprs speeds (calling, chatting, podcasts, music, reading websites anywhere).

It would also be nice to have transflective displays that work in direct sun without using too much power.

Also I wonder whether power could be reduced so much that all-around solar panels can give u a small charge when being away from the grid.

I was under the impression GP felt they should release on a slower cycle, not faster

And with apples negotiation team behind these parts deals, you can be pretty sure that they're the highest priority client.

That means everyone else won't be getting many of these chips at all before apples order is filled.

Exactly. This shows the depth of the problem. Of all the suppliers, Apple probably has the most control of its supply chain.

I am curious what the situation looks like at the major Chinese manufacturers? Even though they werre probably early in buying up supplies being afraid of US sanctions.

The Chinese suppliers seem much more nimble with redesigning a product with different parts to make stuff work. Umidigi for example seems to bump model numbers almost every month on some product ranges, and the different models usually have different firmware images, suggesting they're switching components in or out.

I've seen no sign of a shortage of new phones for sale online, so it doesn't seem the shortage is hitting too hard.

If they really were the highest priority client, the fab would run exclusively for them, right?

They have done in the past. I’m pretty sure Apple helped fund TSMCs 5nm process in exchange for exclusive access to the process for a while.

But we don’t know which chips are in s as shortage, it could be memory chips, display controllers, battery management chips. Plenty of ICs in an iPhone to pick from, and you can’t build an iPhone without them all.

If even Apple is affected, there's no hope for short or mid-term end of this.

Is this why they didn’t release the M2 during the keynote last month?

I think that would be a commercial decision? Why introduce something way better right away? I expect the M-series macs to be milked just like they milked the iPhone chips. M1, M1s, M2, M2s, etc. Small incremental changes so they can keep selling.

I Apple would introduce a radically faster M2(+much faster GPU) and >32Gb ram, with decent connectivity options, I would probably not buy another mac for 12 years again. I already use my macs a long time.

We'll see next Monday, at least rumors are going wild already :)

They were never going to do that. The September keynote is always about iPhones.

Perhaps there is a new dynamic : in the past Apple had a good negotation position because 1) the volume of their orders 2) they were willing to pay a premium as they are in the business of selling premium products.

Now everybody is willing to pay a premium as long as they can get parts.

I heard it’s the Qualcomm power management silicon that’s in short supply

So this company has pretty much infinite money but they can’t get or make chips.

Huh. Don’t know what to make of that.

Well, they might be able to use some of that infinite money to build a chip factory of their own. However, it would take years to become online, so the situation is likely to be resolved until that anyway. And it would be very expensive indeed, as it seems to be extremely difficult and expensive even for companies that already are in the semi business, such as Intel.

Is there any evidence this is actually true?

Literally every year at this time, Bloomberg or the WSJ reports that Apple is due to cut production due to some negative factor or another.

So far it has always turned out to be complete bullshit. It’s pretty obvious that there are many parties who could benefit from such a rumor.

Do you have a few examples?

>Literally every year at this time...

At the risk of being pedantic, your 2020 link is from April 27th, 2019 link is from January 29th, and your 2016 link is from January 6th. Only two of five - 2017/18 - are from this time of year.

You are being pedantic. The time of year is not relevant to the point, and in any case 2 examples in addition to the current one is more than enough.

There is a regular stream of these rumours which have proven to be empty so far. Perhaps the wolf will really come this time.

Thank you.

They don't all conform to the specific pattern you said, but the more general "media keeps reporting iphone production cut rumors" is certainly there.

Could be rumor spread by Apple to increase prices.

You are creating a rumor about a rumor.

Apple has not increased the prices of iPhones in 3 generations. They have removed the charger from the box, but they have also doubled the base storage size.

> Is there any evidence this is actually true?

Apple stock hasn't cratered so the markets don't think much of this story.

> Literally every year at this time, Bloomberg or the WSJ reports that Apple is due to cut production due to some negative factor or another.

You shouldn't be downvoted for stating a fact. For every "fusion energy" story, we've had a "apple production cut" story.

Sounds like an excuse. Apple can afford to pay whatever price these chips are.

This will hit earnings and could spark the next recession.

Be ready for an interesting winter where people won’t be able to repair broken furnaces and will have to abandon homes. This could snowball infrastructure damage.

Response to pandemic about to get wild?



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