Apple warns of future 'supply constraints' for Mac, iPhone, iPad

Apple has issued a warning about impending "supply constraints" for its Mac, iPhone, and iPad product lines. This news caused a stir on Wall Street on Thursday, leading to a more than 7% drop in the company's shares during after-hours trading. This decline occurred despite Apple reporting a 16% increase in revenue, reaching $109 billion (£81 billion), partly due to unexpectedly strong iPhone sales, and a 26% rise in profits to $29 billion.

Tim Cook, the outgoing chief executive, stated that while some supply limitations have already affected Mac availability this year, the situation is expected to worsen and extend to iPhone and iPad products. Cook remarked, "We're seeing some very significant constraints currently with limited flexibility in the supply chain to remedy it."

Apple identified a key factor in these supply constraints as the availability of essential chip components. Devices like Macs and iPhones rely on microprocessors with "advanced nodes"—advanced computer chip technology that enhances speed—most of which Apple sources from TSMC, a Taiwan-based manufacturer. However, Cook emphasized that the primary issue was an unexpected surge in demand, particularly for iPhone and Mac products, which saw sales growth of 22% and 25% respectively during the June quarter. Earlier this year, Apple announced that the launch of its iPhone 17 was the largest in the company's history due to high demand.

Cook clarified, "This is not a regular supply issue, it's a demand forecast issue to be candid. We've got a quarter ahead where we'll be scrambling on the supply side."

Apple also noted that its gross margin, the profit retained from each sale, was 2% higher than it would have been in the last three months due to tariff refunds. According to BBC calculations, this suggests the company received approximately $1.1 billion in such refunds. Cook stated that Apple intends to "reinvest the tariff refunds into the US." The company had previously announced plans to invest $600 billion over the next four years to expand domestic manufacturing, as China currently serves as the largest manufacturer of Apple's products.

Cook also addressed the upcoming public relaunch of Siri, Apple's AI assistant. The company has reportedly faced challenges in making Siri competitive amidst the proliferation of AI chatbots from companies like OpenAI and Anthropic. While the new version of Siri AI is currently in a public beta testing phase, Cook described it as "an enormous opportunity for Apple going forward in AI." He added, "The ability to run on device is also very strategic, and sort of a competitive weapon, if you will." Cook confirmed ongoing negotiations with European Union authorities to ensure the new Siri version is available "to everyone, everywhere at the same time."

John Ternus is set to replace Tim Cook as Apple CEO this year.