Apple shares gain on report of iPad production cuts to prioritize iPhone

Apple shares gained Tuesday following a report that the company is cutting back on iPad production in order to direct scarce semiconductor supplies to iPhone 13 lineup.

Apple Park in Cupertino, California
Apple Park in Cupertino, California

Martin Baccardax for The Street:

The Nikkei business newspaper said iPad production runs are about half of their normal pace over the past two months, owing to Apple’s decision to prioritize chips for its new iPhone 13, which it expects to generate stronger demand over the holiday season.

Cook said last week that “we’re doing everything we can do to get more (chips) and also everything we can do operationally to make sure we’re moving just as fast as possible” heading into the holiday quarter…

CFO Luca Maestri told investors on a conference call that December quarter sales would be “very solid”, and likely hit a record high, with gross margins in the region of 41.5% to 42.5%.

MacDailyNews Take: As we wrote this morning, “People will defer iPad purchases, not waste their money on some crappy iPad knockoff.” Apple shares deserve to rise.

Of course, we were told this would happen last week, as Apple CFO Luca Maestri said in Apple’s Q421 conference call with analysts:

During the September quarter, supply constraints impacted our revenue by around $6 billion. We estimate the impact from supply constraints will be larger during the December quarter. Despite this challenge, we are seeing high demands for our products and expect to achieve very solid year-over-year revenue growth and to set a new revenue record during the September the December quarter. We expect revenue for each product category to grow on a year-over-year basis, except for iPad, which we expect to decline year over year due to supply constraints. For services, we expect our growth rate to decelerate from the September quarter but to remain strong.

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1 Comment

  1. Apple stock barely moved (0.71%). What a ridiculous headline for nothing. The stock could have easily gone down if analysts claimed the chip shortage is hurting both the iPhone and iPad. Some investors are gullible enough to believe anything that’s said about Apple.

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