Apple warns of supply constraints as the iPhone maker and others face a global chip shortage

Thanks to an ongoing global pandemic, numerous industries have grappled with product or component shortages. Sony’s PS5 and Microsoft’s Xbox Series X are still hard to find at retail, Tesla has discussed its own shortage situation, both Ford and General Motors have had to halt production of some models, and now Apple CEO Tim Cook is the latest to warn of impending supply problems as the leading phone manufacturer looks to the upcoming launches of iPhone 13 and new iPads.

The smartphone industry has managed to largely weather the global chip shortage, but that appears to be changing, and it won’t just be Apple’s problem, as Reuters explained. Samsung, which leads the Android smartphone market, enjoyed a 54% increase in profit during the second quarter as chip prices soared, but it simultaneously warned investors that a shortage of non-memory chips could impact its forecast for the remainder of the year.

Samsung and Apple both are able to leverage their sheer size and influence in the market to bargain with third-party chip makers, which puts competing smartphone makers at a disadvantage when supplies are tight. That said, Samsung is still dealing with pandemic-related issues that can affect its bottom line, including when it was forced to temporarily close its Vietnam-based operations due to a COVID-19 outbreak, and its Austin, Texas-based plant completely lost power for a month during the uncharacteristic snowstorm in the region.

Anyone looking to upgrade to a new smartphone later this year – iPhone 13 is expected to launch this fall – should keep in mind that finding the latest model may be harder than in previous years. While the market has changed, and for most consumers upgrading on an annual cycle is no longer worth the cost – many hold on to their existing phones for three or more years – younger adults still tend to lean towards new technology purchases. According to Interpret’s New Media Measure®, about a quarter of college aged adults indicate that they plan to purchase a new smartphone in the next three months, and the figure is similar for Millennials. Older adults, including Baby Boomers and Gen Xers, are much less likely to upgrade their current phones this year. Apple, Samsung, and others should factor this purchase intent into their marketing approaches as they ship their latest products.