Apple Faces Uncertainty Over Foldable iPhone Restock Ahead of Christmas Season
Apple has announced that it remains uncertain about when it will replenish its inventory of the newly launched foldable iPhones, as the critical Christmas shopping season approaches.
The iPhone Duo experienced a rapid sellout, vanishing from store shelves merely a week following its debut, despite its status as Apple’s priciest smartphone, priced at nearly $2,000.
The company has issued a warning regarding “constraints” in acquiring essential components and acknowledged the challenges in accurately forecasting when supply will align with demand.
In an interesting twist, Apple’s new chief executive, John Ternus, disclosed that the firm is grappling with an “unprecedented” escalation in memory costs, particularly for chips, as the artificial intelligence (AI) sector continues to invest vast sums into establishing data centers.
Ternus rolled out the Duo shortly after he succeeded Tim Cook in September.
This smartphone marks the first significant design overhaul in nearly two decades, but numerous customers have reported issues with the device’s display.
Recently, the company committed to replacing any units affected by a problem that caused a “small number” to crack along the internal fold.
During the release of its latest financial figures on Monday, there was no mention of any complications pertaining to the iPhone Duo from Apple’s executives.
Ternus expressed his excitement over the initial response to the foldable phone, while chief operating officer Sabih Khan emphasized the company’s commitment to deliver the Duo “into the hands of our customers as swiftly as possible.”
Apple’s quarterly results for the period ending September 26 did not factor in sales from the Duo, which was released at the end of October.
Nonetheless, Apple reported record-breaking iPhone sales globally over the past year.
iPhone revenue for the quarter surged by 17% to $57 billion (£42 billion).
Sales of Mac computers also witnessed a remarkable growth of 27%, culminating in a record revenue of $10.7 billion during the same period.
Overall, Apple experienced an increase in sales from $102 billion to $114 billion between July and September. Pre-tax profit similarly rose, ascending from $32.8 billion to $36.1 billion.
However, sales for both the iPad and Apple’s wearables, including headphones and smartwatches, declined by 10% and 7%, respectively.
Khan remarked that most Apple devices are still experiencing supply shortages, primarily due to challenges in obtaining sufficient microprocessors utilizing advanced technology.
These components, integral to the performance of Apple devices, are predominantly manufactured through TSMC, a Taiwanese company.
Khan indicated that this issue is expected to persist into the following year, with a significant impact anticipated for iPads and Macs.
The situation has intensified as the company has repeatedly emphasized “unexpected demand” for its offerings.
Ternus also pointed out that Apple continues to face “unprecedented” increases in memory costs, which relate to the storage capacity of devices for applications, photos, and messages.
Much of the memory storage is reliant on data centers that have seen a surge in demand, largely driven by the popularity of AI chatbots and platforms, including those developed by OpenAI and Anthropic.
Consequently, storage costs have escalated for technology firms like Apple.
Earlier this year, Cook described the sudden rise in data center expenses as a “thousand-year flood.”
Apple has subsequently adjusted prices on nearly all of its hardware products by approximately 20%.
Sunil Krishnan from Aviva Investors noted on the BBC’s Today programme that Apple had delivered “a reasonably solid set of results,” particularly praising the “pretty good performance” from its iPhone segment.
While there were apprehensions regarding the company’s guidance on profit margins and memory chip expenses, Krishnan underscored that, in a broader perspective, “margins well north of 45% for a very well-established company are quite impressive.”
Nevertheless, Apple’s share price experienced a decline of 1.8% in after-hours trading.
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