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Apple (AAPL) Delays Mac and iPad Production on Chip Shortage

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Apple (AAPL - Free Report) is the latest victim of the global chip shortage. The iPhone-maker has reportedly delayed production of some of its Macs and iPads due to chip shortage, while supply of certain components for iPhones remains tight, per Reuters, which cited a Nikkei report.

Chip shortage has become a headwind for a myriad of industries, including automobile, home appliances and smartphones.

Coronavirus-induced work-from-home and online-learning waves have resulted in strong demand for laptops, smartphones, gaming consoles and electronic products, thus straining supply lines. (Read more: Global Chip Shortage a Temporary Problem, But in Extraordinary Times)

This, along with U.S. sanctions against Chinese technology companies, has further aggravated the supply shortage. Apple supplier Foxconn expects 10% decline in exports due to the global computer chip shortage.

Apple Inc. Price and Consensus

Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

Markedly, component shortage has forced Apple to push back a part of orders for both Mac and iPads from first half of this year to the second half.

Portfolio Strength to Drive Top-Line Growth

Although chip shortage is a headwind for Apple, it is not expected to impact product availability to consumers, at least in the near term.

Undoubtedly, Apple has benefited from coronavirus-induced strong sales of iPad and Mac. The company is heavily dependent on its flagship product, the iPhone, for growth. Success of the latest iPads and Macs suggests an expanding portfolio that bodes well for growth prospects.

Apple is now rumored to launch a refreshed iPad Pro line-up powered by an updated processor similar to its self-designed M1 chip that can be found in the latest MacBook Air, MacBook Pro and Mac mini.

Moreover, Apple continues to dominate the wearables market, courtesy of the latest Apple Watch 6. According to the latest IDC data, global shipments of wearables increased 27.2% year over year to 153.5 million in the fourth quarter of 2020.

Apple’s wearable shipments were the highest at 55.6 million, up 27.2% year over year, driven by strong adoption of Apple Watch Series 6, Watch SE and Series 3. Moreover, market share stayed at 36.2% in fourth-quarter 2020.

The demand for wearables is expected to remain strong in 2021, driven by growing demand for health monitoring and remote work.

Additionally, the company is reportedly planning to launch Air Tags or Apple Tags (ultra-wideband trackers), along with a number of products. Other Apple products lined up for 2021 include a new pair of AirPods and silicon Macs.

Apple is also expected to launch its first virtual reality (“VR”) headset in 2022. The iPhone-maker’s entry will intensify competition in the VR device market, which includes devices such as Facebook’s Oculus Quest 2, Sony’s PlayStation VR, Microsoft’s (MSFT - Free Report) Windows Mixed Reality and HTC’s Vive and Vive Pro.

Moreover, this Zacks Rank #3 (Hold) company is reportedly working on augmented reality (“AR”) projects to extend its footprint in the fast-emerging AR market, and is anticipated to release its AR devices by 2023. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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