Apple is supposed to face bottlenecks in Power Chips for iPhone 12

Apple is grappling with a shortage of vital chips that control power consumption in iPhone models and other devices. This complicates the ability to meet vacation demand for the latest version of its marquee gadget.
It is unclear to what extent the bottleneck can limit iPhone availability during the crucial startup quarter, which is usually Apple’s busiest. Despite the deficit, suppliers are likely to prioritize the Cupertino, Calif.-Based Apple and its power-hungry iPhone 12 over other customers queuing for scarce parts, said people who asked not to be identified and to discuss private matters.

The growing demand for silicon in a number of products and supply chain disruptions from COVID-19 are the main causes of the shortage, according to the population. Most important Apple chip maker Taiwan Semiconductor Manufacturing announced in October that 5G smartphones require 30 to 40 percent more chip content than 4G. This and the uncertainty in the course of the pandemic are causing customers to temporarily store components for fear of leakage, especially after the large smartphone manufacturer Huawei stocked up on massive amounts before the US sanction period expired in September.

Inventories, which are still troublesome in a global electronics industry, are still recovering from the rolling barriers that messed up transportation routes and cut off workers from factories earlier this year. The disruption is expected to continue over the next two quarters, people said.

Power management is more important on the iPhone 12 than on its predecessors due to additional camera and 5G capabilities, which increases Apple’s need for these components. Four 5G models were launched recently and analysts expect strong consumer demand for the devices. During a recent conference call with analysts, Tim Cook, Apple’s chief executive officer, warned of delivery bottlenecks for the iPhone 12, Mac, iPad, and some Apple Watch models, despite not specifically mentioning power management chips.

Delivery problems for the iPhone are “not a surprise,” since Apple has just started to ramp up production, said the CEO. “It’s hard to predict,” he added, “how long the supply shortages will last.” An Apple spokesman declined to comment.

Apple has several power management chip suppliers, according to a recent iFixit demolition. The iPhone 12 Pro uses a component from Texas Instruments to control power to the camera system, as well as a similar chip from STMicroelectronics NV and one from Qualcomm for the 5G modem.

There is also a power management part developed by Apple in this handset. In 2018, Apple acquired technology and other assets from Dialog Semiconductor Plc for $ 600 million (approximately Rs 4,500 million) to build its own power management chips.

The iPhone production stoppage came over whether Apple could drive demand for its newest device in China after the worst quarterly sales performance since 2014. Investors are concerned that the company is losing momentum to domestic competitors like Huawei and Xiaomi in one of its most critical markets.

In the US, a review of the Apple website shows that customers won’t receive new iPhone 12 Pro orders until late November or early December, while the regular iPhone 12 has no delay. Many iPad models show deliveries between mid-November and the end of the month, while some Apple Watch models show delivery times in late November.

– With the assistance of Mark Gurman.

© 2020 Bloomberg LP

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