Foxconn says industry component shortage may be easing

All those components, some hard to find (Thanks to iFixit)

Foxconn, Apple’s biggest iPhone manufacturer says the end may be in sight for the component shortages that have plagued the industry since COVID-19

The end ain’t nigh

In what might become good news for the entire industry, the company said it expects major improvement in parts shortages in Q1. It also said overall constraints in component supply should loosen up in the second half of the year.

Component supply shortages have impacted every company.

At Apple, these have been particularly felt across what CEO Tim Cook calls “legacy nodes”.

The company has done its level best to manage its business despite these constraints. All the same, it’s thought some iPhone sales were deferred into subsequent quarters and iPad production was impacted.

“Our largest issue by far has been the chip shortage,” Cook said during a recent financial call.

“That is industry-wide and on these legacy nodes. Our supply chain actually does very well considering the shortages, because it’s a fast-moving one and the cycle times are very short.”

“There’s very little distance between a chip being fabricated and packaged and a product going out of the factory,” he also said.

Counterpoint market data shows big spike in iPhone sales

Apple is a big spender

To understand the scale of Apple’s component demand, the company spent $60b on components from US firms in 2018 alone.

[Also read: Apple’s MacBooks, iPads see market share gains in 2021]

Apple is very likely to benefit from any improvement in the supply of ‘legacy node’ components it relies on. It also has an advantage in that its processors inside iPhones, iPads and (most) Macs are now uniquely made for it. That means it has secured the supply of chips, while other firms must compete for what supply is available.

It’s not all good news. Foxconn/Hon Hai did admit that power management chips remain in short supply. This may have an impact on some planned Apple products, I suspect.

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