Apple Inc is likely to cut production of its iPhone 13 by as much as 10 million units due to global chip shortages, Bloomberg News reported Tuesday, citing people familiar with the matter.

According to Bloomberg, the company was expected to produce 90 million units of the new iPhone models by the end of this year. The report said Apple told its makers that the number of units would be less because chip vendors, including Broadcom Inc and Texas Instruments, struggle to deliver components.

Shares of Apple fell 1.2% in after-hours trading, while Texas Instruments and Broadcom jobs fell about 1%. Apple declined to comment. Broadcom and Texas Instruments did not immediately respond to Reuter’s requests for comment.

In July, Apple forecast a slowdown in revenue growth, saying that chip shortages, which had started to affect its ability to sell Macs and iPads, would also affect iPhone production. Texas Instruments also gave a soft revenue outlook that month, hinting at concerns about chip supply for the rest of the year.

The chip crisis has put immense pressure on the automotive and electronics industries, leading many automakers to temporarily suspend production.

With its enormous purchasing power and long-term supply agreements with chip suppliers, Apple has weathered the supply crisis better than many other companies, leading some analysts to forecast that the iPhone 13 models launched in September would have a solid sales year as consumers looked to upgrade devices for 5G networks.

Jeff Fieldhack, research director at Counterpoint Research, said the reported Apple production cut could also be part of the iPhone maker’s normal launch process of overordering devices to be prepared for an initial flood of customers and then cutting back on custom orders that sales trends become clearer.

Fieldhack said that iPhone 13 sales appear to be healthy and higher than last year’s iPhone 12, and Counterpoint will not change its estimate of 85 million to 90 million iPhone 13 sales for the fourth quarter.

Source: Reuters