Nikkei Asia: iPhone production stopped for the first time in more than a decade!

Nikkei Asia: iPhone production stopped for the first time in more than a decade!

Nikkei Asia: iPhone production stopped for the first time in more than a decade!

News News At the beginning of October, when most parts of China Shutting down for the Golden Week holiday, Apple’s supply chain is the opposite, with factories like Foxconn, Pegatron and the like going into overtime and 24-hour shifts to speed up production of Apple’s latest iPhone. This year, not only is there no overtime, but the workers have gone on vacation! For the first time in more than a decade, production lines for iPhones and iPads have come to a complete halt for several days due to supply chain problems and power restrictions in China, according to Nikkei Asia, citing “multiple sources with knowledge of the situation.

A supply chain manager involved in this situation in an interview with Nikkei Asia while pointing out that due to the limitation of parts and chips, overtime on holidays and paying higher salaries for “frontline workers” is a logical justification. “This [happening] has never happened in the past,” he adds. The Chinese golden holiday has always been the busiest time [for Apple] in the past; Where all assemblers were employed to improve production.”

Chipset shortage crisis has involved many electronic device manufacturers in various industries from computer and smartphone manufacturers to car manufacturers since several months ago. But Apple until recently, relying on some foresight and of course its distinct relationships with the key creators of this The industry (especially TSMC) was somewhat spared from the devastating effects of this crisis. This crisis, but Apple’s financial report for the quarter ending September 2021 has also emerged, and the company’s CEO Tim Cook predicted a $6 billion impact of supply chain constraints, describing them as more than expected. And he spoke of a bigger loss for the last quarter of this year (ending December 2021).

After the unveiling of iPhone 13 family and new iPads last September Terms for Apple became even more difficult, and the company fell behind its projected production goals, leading to billions of dollars in losses for the group. To determine the severity of this story, it is enough to know that in many countries it is already too late to buy an Apple product as a New Year’s gift! With the production of more than 200 million iPhones, 20 million MacBooks, 50 million iPads and more than 70 million AirPods per year, Apple is undoubtedly in an uncompetitive position in the world of electronic consumer goods, but even this empire is facing pervasive supply chain problems this year. He has not been dismissed and now in the middle of the harvest season, which is the peak of the company’s sales during the New Year holidays, he is experiencing a bitter nightmare before Christmas. This issue should be considered a critical example of the wider destruction that supply chain problems have caused in consumer goods manufacturing companies; Some of the problems are to be found in the closing of factories due to the COVID-19 pandemic, logistical problems and restrictions on energy production. Nikkei went beyond this to shed light on the crisis facing Apple. Interviews with more than 20 industrial implementation managers in three different continents, following the path of production of internal parts of the iPhone 13 Pro Max phone and putting together evidences and evidences speak of the unprecedented challenges facing Apple. These challenges can be attributed to the turmoil caused by the era of COVID-19, but many of them are rooted in issues that preceded the global pandemic and, above all, tensions between the United States and China over sensitive technologies.

Apple will produce 20 percent of its previous targets for the new family of phones in September and October, Nikkei said, citing people involved in the production chain.iPhone 13 was behind and this shortage happened after Apple used all the necessary parts in its other production lines to make the new flagship iPhones. (as the company’s biggest source of income) and other products such as iPads and older phones iPhone 12 and iPhone SE was sacrificed for the iPhone 13 series. Therefore, in the same period of time, the production line of other products due to the allocation of their resources to the iPhone, naturally faced a serious blow, and according to numerous Nikkei sources, the production of iPads and older iPhones decreased to 50% and 25% less than the predicted goals, respectively. This situation has apparently not changed significantly in November.

Under this unprecedented pressure, Apple reduced its goals for the production of various products and, for example, instead of the number of 95 million expected for the iPhone 13 family, now from The production of 83 to 85 million by the end of the year speaks. This is true for the entire year as well, and despite ramping up production again in November, the company is still 15 million behind the 230 million iPhones it predicted at the beginning of 2021; Something that, of course, Apple has not commented on it yet.

Nikkei in the rest of this article, a look at the internal parts iPhone 13 Pro Max in search of the cause of Apple’s problems in supplying parts; According to Nikkei, the main problem is not the most expensive and critical parts (such as the $45 A15 processor, the internal 5G modem, and even the advanced OLED display, which may cost $105), and the problem should often be found in some small parts. Look for “peripherals” such as Texas Instruments power control chips, Nexperia transceivers, and Broadcom communication chips; The important problem is that such chips are not specific to iPhones, smartphones, and even electronic consumer goods, and are used in a wide range of applications from computers and data centers to home appliances and even connected cars. Used!

Internal components and manufacturers of the internal components of iPhone 13 Pro Max

A representative of Nexperia In this regard, he says: “The entire semiconductor industry… due to the increase in lead time for raw materials, is not able to meet this critical need. [that] this leads to scarcity.” To determine the critical situation of Apple, we must follow the conditions of each of the factories that manufacture its vital parts; For example, the quarantine and lockdown for several months in Vietnam had a great impact on the camera module made by Sharp, which in turn made the production of the final product difficult; The problems of COVID-19 in Malaysia affected many electronic components and chips, and the key role of Southeast Asian countries in the final packaging and testing of chips has also reinforced these problems. In the meantime, the final blow to Apple’s production body came with unexpected restrictions on electricity consumption in China, which disrupted the production process more and more. In an interview with Nikkei, an Apple supplier executive described the crisis as follows: “Even if you have 99% of the parts [required for manufacturing] ready on hand, if you run out of one, two or three parts, It will not be possible to start the final assembly process.”

Manufacturers of iPhone 13 Pro Max external parts

This year, Apple expected a brilliant year with the withdrawal of Huawei from the mobile market due to the pressures and sanctions of America and Actually, the supply of iPhones in the first 9 months of this year also increased by 30% compared to 2020; However, due to the reasons described, this situation faced great problems in practice, and now many of the company’s orders have faced many delays, so that according to the table below, if you were to purchase a new iPad on December 1st, in many countries you won’t get it before mid or late January and this is for the iPhone 13 Pro And while it’s improved from the 5-week delivery time a month ago, it’s still between one and two weeks in many areas.

According to Nikkei, a company like Apple has benefited from a diverse range of global suppliers for its chips and components. To date, the company has rarely agreed to pay a higher price to a supplier to guarantee the purchase of a product, as many suppliers will do anything to support Apple and prevent the market from falling into the hands of their competitors. With such high purchasing power, Apple didn’t see much of a problem for 2021, launching the iPhone 13 series in the fall with production starting in late August (unlike last year and the delays caused by COVID-19). While the situation was going according to Apple’s plan, the delta variant of the coronavirus suddenly broke out in Southeast Asia last summer, involving nearly 10,000 supply chain managers, engineers, and Apple’s logistics staff. The forces that were in charge of negotiating the price with global suppliers to monitoring the quality of manufacturing hardware parts and logistics planning of this company.

Quarantine and Lockdown in Malaysia, which has 13% of the chipset assembly and packaging capacity in the world. and the problems of companies such as Rohm, STMicroelectronics, ams, Murata Manufacturing, ON Semiconductor, Renesas Electronics, Texas Instruments and Nexperia, all of which are directly related to Apple, have multiplied the limits of the Cupertino giant. Vietnamese manufacturers that produce many key components of Apple devices, including iPhone cameras, just as Apple prepares to mass produce iPhone 13 were forced to suspend their operations for at least 2 months. In this situation, the Vietnamese government asked the factories that wanted to remain open to keep their workers in the factory environment 24 hours a day to prevent the transmission of the virus; This is especially impossible for companies with thousands of workers and no one is able to build dormitories for thousands of people in a factory environment overnight. Greenhouse gas emissions from environmental targets and rising coal prices have seen the Chinese government impose new restrictions on electricity consumption in some key industrial regions, including Guangdong and Jiangsu, where several Apple suppliers with more than 150 facilities are located. A factory is engaged in the production of vital parts from printed circuits to batteries. Many of these suppliers learned of the law a day or even an hour or two before their electricity would be cut off for at least a week, and despite extensive efforts to negotiate with local authorities, they had no choice but to keep their workers for fear of losing their workforce after They didn’t have electricity back either!

The concerns of component manufacturers and of course Apple itself will continue into the next year, and many companies have spoken about the lack of hope to solve this big problem in the near future. In the meantime, a company as big as Foxconn (the largest iPhone assembly plant and the largest contract manufacturer of electronic components in the world), despite earning strong income between July and September 2021, has expressed doubts about the continuation of these positive conditions in the next year and the crisis of chip shortage. He considered inflation and geopolitical events to be effective in this concern.

It is clear that these conditions are not only for Apple Rather, it is happening to almost all different companies at different levels, and Apple in some cases may even be in a better position, as Wall Street forecasts suggest. With all the mentioned problems, Apple’s net profit in the final quarter of 2021 will still reach 30.8 billion dollars with a 7% increase compared to the previous year, despite the loss of billions of dollars in revenue.

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