Apple is overcoming a costly global shortage of computer chips, posting record sales in the holiday quarter, beating profit forecasts and forecasting its shortfall is narrowing.

Analysts said the iPhone maker, the world’s largest company by market value, has weathered supply chain challenges, such as factory closures and shipping delays from the pandemic, better than any of its top peers. Apple shares rose about 5% in after-hours trading, recovering half of this year’s losses.

More people wanted iPhones, iPads and other gadgets than Apple had to sell during the holiday season, costing the company more than $6 billion in lost sales, or what it feared. However, Apple, the largest customer of many component suppliers, has used its purchasing power to squeeze those suppliers to provide enough products to drive record sales in its iPhones, Macs and wearables and accessories. Apple executives said the chip shortage mainly affected its older products, especially slowing iPad sales.

“They navigate the supply chain better than anyone, and that’s reflected in the results,” said Ryan Reith, who researches the smartphone market for industry tracker IDC.

Apple said the four best-selling phones in Chinese cities were all iPhone models because rivals struggled to make their products. It was the top-selling supplier in China for the first time in six years, research firm Counterpoint Research reported on Wednesday.

Apple’s growing sales of services such as music, TV and fitness subscriptions are also helping to cushion the blow from a shortage of devices. The company said it now has 785 million paying subscribers on at least seven of its subscription services, up 40 million from the previous quarter, and assuaged investor concerns about slowing growth in rivals such as Netflix Inc.

Better yet, Apple CFO Luca Maestri told Reuters that easing the chip shortage should mean a loss of less than $6 billion in revenue for the quarter. But he declined to further estimate the future.

“The extent of the restrictions will largely depend on how other companies, other companies and other industries will have demand for chips,” he said.

The iPhone 13, which began shipping just days before the start of the quarter, brought in $71.6 billion in global handset sales for Apple, up 9% from the 2020 holiday quarter and easily beating Wall Street’s targets, according to Refinitiv data. Maestri attributed the sales growth to a record number of upgrades to older iPhones and a double-digit increase in the number of people switching from competitors.

Complete News Source : Business Standard