Apple Expects Supply Constraints to Continue in Q3 2022

[Solomani]

Isn't there a popular saying in the stock market regarding having a diversified portfolio is a safe way to invest?

I don't understand why it took a pandemic for Apple to think about diversifying its supply chain...if they had a diversified their supply chain, they wouldn't be thinking about losing 4-8B next quarter...insane...

To be fair, Apple has been attempting to diversify its production away from a "China-only" strategy. But most of those efforts have seen limited success. They attempted some US-assembly strategy with the iMac Pro years ago, but that didn't really take off.

And then Apple has been trying to penetrate into India manufacturing as well, for several years now. Except that India's nationalistic government has done a lot of business-unfriendly moves to hinder and hamper Apple.

Nationalistic governments tend to do that, you know? They do everything to PISS OFF foreign investors and to harass and disadvantage foreign corporations in the name of Protectionism.

 

[thadoggfather]

I hope supply constraints wont be an issue in Q4. In Q4, Apple should be expecting a mega-cycle for the new iPhone 14 and Apple Watch 8.

iPhone 14, yea.

Watch 8, I dunno think it will be a tock.

 

[ian87w]

With the way most consumers today have FOMO mindset, news like this will actually push people into buying more products. Quite smart making such statement. And people will even more likely to give Apple a pass if they increase their prices even higher.

 

[ian87w]

It’s fun trying to buy an ipad 9th gen in Korea. You buy it from Apple, there is a 1 month wait. You can find them all day at Hi-Mart, if you pay more. Sale in Apple products anywhere else? Price here remains the same. The sellers just make more money off of you. Korea is such a scam.

It's supply demand, free market in effect.
It's worse in my country where Apple has no official presence, thus we are at the mercy of the official distributors.

The Apple brand is so highly sought after that people are willing to pay more for it.

 

[popdan]

wouldn't start producing iphone14 parts early does the job?

 

[Solomani]

With the way most consumers today have FOMO mindset, news like this will actually push people into buying more products. Quite smart making such statement. And people will even more likely to give Apple a pass if they increase their prices even higher.

Ironically..... that same FOMO mindset is a contributing factor to the rapid inflation, the crazy I NEED TO BUY EVERYTHING TODAY consumerism that has afflicted us all since the pandemic. That extreme consumerist mindset is definitely a factor in the global supply constraints.

I'm guilty of the same thing. Back during the worst COVID surges, I splurged on several boxes of my favorite N-95 masks any time I found them on sale. My thinking was that if I procrastinated the immediate purchase, the economy would make them cost much much higher some months later on.

And during the earliest months of the Pandemic.... people went crazy and pre-emptively cleared out store shelves and bought massive stockpiles of toilet paper. Which then resulted in basic goods (like pasta, Lysol sprays, and toilet paper) becoming stupidly marked up and expensive for many months. Remember that crazy time?

 

[a1s0t3n0]

I will never understand how people on a site dedicated to Apple never seem to have anything nice to say about anything the company does. We. Are. Still. Coming. Out. Of. A. Pandemic. The world has supply chain issues. How about we celebrate in their success for like a moment? Anyone? ?‍♂️

 

[senttoschool]

Outsourcing kharma.

Well maybe it’s time to move out of china

People here complain when Apple raises the price by $50 or $100. Imagine how much an iPhone would cost if it was manufactured in America, where workers demand far higher pay, environmental laws significantly increase costs, workers unionize, workers won't live in dormitories or work long hours or sit in one chair doing the something endless all day, and you simply can't find and hire hundreds of thousands of these workers in America.

My guess is that iPhones would cost $5,000 if they were made in the US which would make them non-competitive against Samsung and other Chinese phone makers.

 

[senttoschool]

I’d say it’s no big deal to miss out on $4B to $8B revenue. It’s like missing a few days of revenues and that revenue is not necessarily lost - it could be deferred a bit. Longer wait times for iPad, that’s all it is

Yea, I don't understand why this is a big deal.

Sure, some of these people will opt to buy an Android device or a Windows computer, but most of them will just wait. Apple will take their money now or a little bit later.

 

[senttoschool]

To be fair, Apple has been attempting to diversify its production away from a "China-only" strategy. But most of those efforts have seen limited success. They attempted some US-assembly strategy with the iMac Pro years ago, but that didn't really take off.

And then Apple has been trying to penetrate into India manufacturing as well, for several years now. Except that India's nationalistic government has done a lot of business-unfriendly moves to hinder and hamper Apple.

Nationalistic governments tend to do that, you know? They do everything to PISS OFF foreign investors and to harass and disadvantage foreign corporations in the name of Protectionism.

It was the Mac Pro that was assembled in the US. Basically, it's an insanely niche product with huge margins so there is zero difference where it is assembled. Most of the parts are made in China anyway. Somebody just needed to plug the parts in.

A lot of people in the US are in disbelief but India is business-unfriendly and far less stable despite being a "democracy".

 

[Solomani]

I will never understand how people on a site dedicated to Apple never seem to have anything nice to say about anything the company does. We. Are. Still. Coming. Out. Of. A. Pandemic. The world has supply chain issues. How about we celebrate in their success for like a moment? Anyone? ?‍♂️

If it makes you feel better.... I'm happy that most Wall Street analysts are openly saying:

"Apple is the last FAANG still standing. The others have been knocked out, or have had their teeth knocked out. Even Amazon stock just cratered, AMZN just saw its first net revenue loss in 7 years. Netflix is on life support. Facebook is in a world of hurt."

Apple Is the Last FAANG Standing. How Its Earnings Could Move the Market. (Barrons)​

 

[Solomani]

It was the Mac Pro that was assembled in the US. Basically, it's an insanely niche product with huge margins so there is zero difference where it is assembled. Most of the parts are made in China anyway. Somebody just needed to plug the parts in.

A lot of people in the US are in disbelief but India is business-unfriendly and far less stable despite being a "democracy".

You are right. I meant to say the Mac Pro, rather than the iMac Pro. I believe it was that cylindrical Mac Pro IIRC, the one that looked like a cylindrical miniature thermonuclear bomb.

 

[Lestdog]

If it makes you feel better.... I'm happy that most Wall Street analysts are openly saying:

"Apple is the last FAANG still standing. The others have been knocked out, or have had their teeth knocked out. Even Amazon stock just cratered, AMZN just saw its first net revenue loss in 7 years. Netflix is on life support. Facebook is in a world of hurt."

Apple Is the Last FAANG Standing. How Its Earnings Could Move the Market. (Barrons)​

Facebook? That disease seems to be doing fine.. meta stock is surging.

 

[Solomani]

Facebook? That disease seems to be doing fine.. meta stock is surging.

Latest quarterly sucked balls tho ... Zuckerberg blamed Apple for enforcing privacy changes. LOL

FB stock still down 32.5% overall in the last 3 months alone.

 

[_Spinn_]

Based off the lockdowns still going on in China, I expect that supply chain issues will continue well into next year at least.

 

[44267547]

The focus shouldn’t be if supply constraints ‘will happen throughout 2022’, because we all know that is obviously the situation.

The focus should be, ‘What is consumer spending going to be like moving forward and what can we do as a company to maximize our sales’.

That’s the focus I suspect Apple will have to use to really maximize their marketing on their entry-level products with the iPad, Apple Watch SE, lower model iPhones, etc.

With inflation averaging ~8.4% I believe in the month of March, and with fuel prices completely unstable, retail/grocery commerce inflation, consumers are going to be more budget conscious moving forward, especially for larger families that will be hit the hardest. So, I see consumers either reserving their cash flow and not spending money on superfluous tech they don’t need [or] they buy cheaper model products from Apple, because it can save them some money from the more expensive models.

I just had a conversation the other day with a fellow investor, and he said, inflation causes consumers to re-strategize and become more defensive with how they spend their money, which a smart company also learns to re-strategize how they can get the consumer to spend their money, even if it means buying something from them, even if it’s not their ‘top product’. But the key is, not to lose the customer all together to the competitor, but to retain them.

 

[chucker23n1]

Apple had some difficulty meeting demand

Quite.

I ordered an MBP on April 4th. It was due for delivery April 27-May 2, which is already three and a half weeks, but OK.

On April 28, the order quietly changed (come on… notify me, at least?) to due for June 9-23, so between 9.5 weeks and 11.5 weeks.

Hope it's worth it.

 

[laptech]

I smell BS from Apple here because they have been going on about supply contraints for the past two years now saying it will hit sales due to lack of products being able to be manufactured due to chip shortages that have been affected by fire at a chip processing plant and the pandemic and plant shutdowns in China due to ongoing covid outbreaks but yet in the same breath MR has articles about Apple breaking sales profits for the past year. How exactly can that be if Apple have been complaining about product shortages due to supply contraints?

 

[JippaLippa]

Reason why I bought all I could during the first part of the year.

I refreshed my whole setup (Phone, work computer, gaming computer) between November and April so that, even in the worst shortage, I have got everything I need.

 

[triton100]

A lot of expectations are already priced into that $2.67T valuation. If you think Apple is worth more than that, you can long.

I don’t agree with this. The market and analysts have a consistent track record in misinterpreting data from unreliable sources in order to attain their predictions. They traditionally set hugely inflated financial expectations which when apple were unable to meet led to the stock dropping. To the point where apple were constantly advised and finally decided to stop providing future revenue expectations for which analysts could then abuse. The market pricing in valuation is based on hot air as opposed to firm facts which is why it’s completely nonsensical the majority of the time.

 

[senttoschool]

I smell BS from Apple here because they have been going on about supply contraints for the past two years now saying it will hit sales due to lack of products being able to be manufactured due to chip shortages that have been affected by fire at a chip processing plant and the pandemic and plant shutdowns in China due to ongoing covid outbreaks but yet in the same breath MR has articles about Apple breaking sales profits for the past year. How exactly can that be if Apple have been complaining about product shortages due to supply contraints?

Let me explain like you're five.

Before COVID, 100 people wanted to buy an iPhone. Apple made 100 iPhones.

During COVID, 200 people wanted to buy an iPhone. Apple could only make 150 iPhones.

Thus, Apple is breaking records in revenue and profit but still supply constrained.

Does it make sense?

 

[Abazigal]

Isn't there a popular saying in the stock market regarding having a diversified portfolio is a safe way to invest?

I don't understand why it took a pandemic for Apple to think about diversifying its supply chain...if they had a diversified their supply chain, they wouldn't be thinking about losing 4-8B next quarter...insane...

I don’t think Apple is thinking of diversifying because of the pandemic. That has always been in the cards, for a number of reasons, but it’s not something that can be done overnight.

Truth is, turning to China was what allowed Apple to grow to their current size today, because only China is capable of churning out Apple products in the quantities that consumers demand. Had Apple tried to set up factories elsewhere, quality may not be as good, costs would have been higher, and they wouldn’t have been able to sell to as many customers.

I doubt anyone can deny that setting up shop in China has worked out well for Apple. Having the occasional supply hiccup due to unforeseen circumstances like a global pandemic is, in the long run, a momentary blip that will do little to slow Apple’s growth.

 

[senttoschool]

I don’t think Apple is thinking of diversifying because of the pandemic. That has always been in the cards, for a number of reasons, but it’s not something that can be done overnight.

Truth is, turning to China was what allowed Apple to grow to their current size today, because only China is capable of churning out Apple products in the quantities that consumers demand. Had Apple tried to set up factories elsewhere, quality may not be as good, costs would have been higher, and they wouldn’t have been able to sell to as many customers.

I doubt anyone can deny that setting up shop in China has worked out well for Apple. Having the occasional supply hiccup due to unforeseen circumstances like a global pandemic is, in the long run, a momentary blip that will do little to slow Apple’s growth.

What people don't understand is that China is making more iPhones than ever. The demand is just too great.

 

[laptech]

Let me explain like you're five.

Before COVID, 100 people wanted to buy an iPhone. Apple made 100 iPhones.

During COVID, 200 people wanted to buy an iPhone. Apple could only make 150 iPhones.

Thus, Apple is breaking records in revenue and profit but still supply constrained.

Does it make sense?

No need to be rude!!!

During the pandemic, people lost their jobs, people not being able to work due to lock downs thus not able to be paid, deliveries not taking place and your trying to tell me a mass load of people suddenly went out and purchased Apple products!!!?? Nope, do not believe it. I want to see independant proof before I accept what your trying to say.

 

[senttoschool]

No need to be rude!!!

During the pandemic, people lost their jobs, people not being able to work due to lock downs thus not able to be paid, deliveries not taking place and your trying to tell me a mass load of people suddenly went out and purchased Apple products!!!?? Nope, do not believe it. I want to see independant proof before I accept what your trying to say.

Proof?

How about looking at the financial reports that Apple has been releasing every quarter? These financial reports don't lie. They're audited by external 3rd parties often.