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Apple trims iPad production to feed chips to iPhone 13

Apple has cut back sharply on iPad production to allocate more components to the iPhone 13, multiple sources told Nikkei Asia, a sign the global chip supply crunch is hitting the company even harder than it previously indicated.

Production of the iPad was down 50% from Apple’s original plans for the past two months, sources briefed on the matter said, adding that parts intended for older iPhones were also being moved to the iPhone 13.

The iPad and iPhone models have a number of components in common, including both core and peripheral chips. This allows Apple to shift supplies between different devices in certain cases.

The company is prioritizing iPhone 13 output in part because it forecasts stronger demand for the smartphone than for the iPad as Western markets begin to emerge from the coronavirus pandemic, sources said. Europe and the Americas account for 66% of Apple’s revenue.

The peak of new iPhone sales also comes within months of release, so ensuring smooth production for the iPhone 13, which was released on Sept. 24, is a top priority for Apple right now.

Demand for the iPad, however, has also been robust thanks to the rise of remote working and learning amid the pandemic. Global shipments of iPads climbed 6.7% on the year to 53.2 million devices last year, securing a 32.5% global market share, far ahead of the No. 2 Samsung’s 19.1% share, according to IDC data. Total iPad shipments were 40.3 million for the first nine months of this year, up 17.83 % from the same time a year ago.

Global tablet shipments for 2020 came to 164.1 million units, up 13.6% from the year before.

This is not the first time Apple has prioritized iPhones over iPads. In 2020, it reallocated some iPad parts to the iPhone 12, its first full-range of 5G handsets, to shield its most iconic product from supply chain constraints during the COVID-19 pandemic.

This time around, shoppers are facing significant wait times for new iPads. In the Americas or Europe, those who ordered an iPad with 256 GB storage at the end of October will have to wait until Dec. 15 for delivery, according to Apple’s website. For those ordering the latest iPad mini, delivery will be around the first week of December. Consumers in China, Apple’s third-largest market, also have to wait up to six weeks to get a new iPad.

Apple has acknowledged the impact of the global supply constraints. CFO Luca Maestri said in a recent earnings briefing that iPad revenue for the October-December quarter is set to drop due to component constraints, adding that this is the only product expected to see a decline. CEO Tim Cook said revenue for July-September was $6 billion lower than it would have been due to the “industrywide silicon shortages and COVID-related manufacturing disruptions.” The impact for the current quarter could be even larger, he said.

Brady Wang, a tech analyst with Counterpoint Research, told Nikkei Asia that it is natural for Apple to prioritize iPhones over iPads in the face of component constraints.

“The scale of iPhone shipments of around 200 million units a year is much bigger than that of iPads. Apple’s most important and critical ecosystems are all surrounding iPhones, its iconic product. To add one more point, iPads do not have that strong seasonality like its flagship iPhones, which are always launched in autumn,” Wang said.

Meanwhile, Apple is already a dominant player in the tablet market with its iPads, Wang said. “Fewer users will turn to Android tablets if they are considering buying an Apple iPad but need to wait a bit longer. However, there could be a possibility that people could turn to … Android phones if they could not immediately buy an iPhone,” the analyst added.

Apple did not respond to Nikkei Asia’s request for comment by the time of publication. Nikkei

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