The stock of Apple Inc. (Nasdaq: AAPL) hogged the limelight yesterday after mainstream media. Tech-focused publications reported that the iPhone brand owner faces specific MacBook production and iPad variants due to worldwide chip shortage.
The surge in consumer spending has caused an unexpected rise in automobiles and electronic gadgets that incorporate custom-built integrated chips.
Shortages in chip supply have already forced automobile companies such as Ford to temporarily suspend production for few days in some of their manufacturing facilities.
The chip shortage has now started affecting an essential stage in the production of MacBook. News reports indicate that even the iPad assembly has been postponed due to a lack of displays and related components.
Apple’s stock closed Thursday’s trading session at $130.36, up to $2.46 or 1.92% from the previous close.
Due to the shortage in chips’ availability, the Cupertino, California-based Apple has postponed some portion of its component orders for the two gadgets from the initial half of 2021 to the second half of 2021. Apple is yet to respond to the report.
The report also states that the shortage of chips does not impact the production of iPhone models. Nevertheless, the availability of specific components for the gadgets is pretty “tight.”
The disruption in the component supply chain continues to be a problem for Apple but has not affected its availability for the public.
Foxconn, the top contractor of Apple, had also issued a caution regarding the chip shortage impacting the distribution chain. Foxconn has acknowledged that businesses around the world are confronting the issue of an unexpected lack of semiconductor chips.
Taiwan based Foxconn, which is the world’s biggest contractor of electronic gadgets, recorded a net profit of TWD 45.97 billion (~$1.60 billion) in the December 2020 quarter, a 4% decrease on a y-o-y basis, and missed the TWD 50.89 billion (~$1.90 billion) figure anticipated by economists surveyed by Refinitiv.
David Huang, CFO of Foxconn, pointed out that the firm’s gross margin was affected by the COVID-19 pandemic, but smartphones’ robust sales ensured stronger-than-anticipated performance in 4Q 2020.
Earlier referred to as HonHai Precision Industry, Foxconn’s fourth-quarter revenue increased 15% on a y-o-y basis. The surge primarily led to the rise in revenue in demand for smartphones, which represented 63% of its overall business in the reported quarter, as per Foxconn’s data.
The company had earlier predicted fourth-quarter revenue to be between a decrease of 3% and a gain of 3% from the prior-year period.
The news is expected to keep the stock of Apple range-bound in the short term. In case a shortage of Apple products arises in the market, the stock will face selling pressure.
The historical price chart indicates that the stock moves along the ascending trend line, as shown in the image below. The stock is also trading above the 50-day moving average, while the stochastic indicator is just out of the bearish zone. Therefore, we are anticipating the stock to remain in an uptrend in the near term.
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