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Author: Alan LittleDate: 2021-11-03

Apple (AAPL) diverts chips to iPhones to ease shortages, shares +1.28%

A report by Nikkei claims that Apple (AAPL) has slashed production of iPads to use more of its chips on popular iPhones amid ongoing supply chain issues.

Apple (AAPL) is reportedly tackling ongoing supply chain issues by diverting much-needed parts from iPad production to its more popular iPhones in news that sent shares 1.28% higher on Tuesday.

Japanese financial newspaper Nikkei claims that Apple has dialled back production rates for iPad models to around 50% of its normal capacity due to the critical shortage of semiconductor parts.

Instead, the chips are being funnelled into production for the iPhone 13 and iPhone 13 Pro amid solid consumer demand for the latest line-up of premium smartphones.

While some companies such as Tesla (TSLA) appear to have been able to navigate the shortages without taking a hit on sales, Apple revealed in its Q3 report that chip scarcity had ripped a $6bn hole in its finances.

The Cupertino-based company posted its first revenue miss for four years and only matched earnings expectations last week.

It also admitted that the disruption is set to linger on into Q4.

CEO Tim Cook responded to investor concerns about shortages and the possibility of recalibrating supply chains to reduce the impact in a call.

He said: “We’re reducing our lead times and cycle times, so that when you get a chip off of a fab… as quickly as possible, it’s in a product and shipping.”

Cook added that Apple was doing all it could to increase its parts supply, but other reports have said that around 10 million fewer units could be made by the end of the year due to delays.

The latest news comes just days after Apple was usurped by Microsoft (MSFT) as the world’s most valuable traded company.

It went some way to recover lost ground on Tuesday as shares edged 1.28% higher to $150.82 on the Nasdaq.

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