[Asia Economy Reporter Kwon Jae-hee] Despite the global semiconductor shortage that has shaken industries worldwide, Apple has minimized the impact by building an independent supply chain and is reportedly increasing iPhone production.
According to Bloomberg on the 13th (local time), Apple has lowered the production target for the new iPhone 13 at assembly contractors such as Pegatron and Foxconn from the initially planned 90 million units to 80 million units this year. This is interpreted as an adjustment due to the semiconductor supply shortage.
Earlier, Bloomberg also reported that Apple would reduce the iPhone 13 production target by 10 million units this year.
Nevertheless, Bloomberg pointed out that this is slightly higher than the production volume at the launch of the iPhone 12 last year. Previously, Apple typically placed orders at around 75 million units.
This shows that the global semiconductor crisis is severe enough to affect Apple's production capacity, while the fact that Apple is securing the necessary supply adequately contrasts with other industries struggling with semiconductor shortages.
Typically, Apple produces more than the expected demand and adjusts accordingly if actual demand is lower.
Bloomberg analyzed that Apple has built its own buffer system in case supply problems arise.
Apple's firm supply chain control capability, which allows it to exclusively secure tens of millions of parts even in this situation, has contributed to Apple's success.
Furthermore, the exclusive supply chain acquisition is credited to the supply chain improvements made extensively by CEO Tim Cook when he was the Chief Operating Officer (COO).
At that time, COO Tim Cook simplified the complex supply chain and focused on inventory management. He reduced the number of contracted parts suppliers from 100 to 24 to enhance competitiveness and pursued exclusive contracts for key components. He also signed long-term contracts with major suppliers to ensure stable supply.
Through this supply chain strategy, Apple not only gained a competitive edge but also maintained low research and development (R&D) costs.
While semiconductor companies like Qualcomm invest 25% of their sales in R&D amid fierce component procurement competition, Apple's R&D investment ratio was only 6.1%.
Ultimately, Bloomberg assessed that Apple's concern lies more with demand than supply.
Movements to reduce the US economic stimulus and the slowdown of the Chinese economy may affect the purchasing power of potential customers, potentially impacting iPhone demand.
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