When device production typically ramps up, Apple cut the assembly of the devices for several days because of supply chain constraints and restrictions on the use of power in China.
According to a report by the Japanese newspaper, Apple suppliers increased production for the first time in more than a decade, with workers getting time off rather than overtime hours.
Due to limited components and chips, it made no sense to work overtime on holidays and give extra pay to front-line workers, according to a supply chain manager. That has never happened before. The Chinese golden holiday was the most important time of the year when all of the assemblers were getting ready for production.
Tim Cook said that supply constraints around the time of the iPhone launch cost Apple $6 billion. Cook cited chip shortages as one of the reasons for the supply issues, and while Apple uses leading edge nodes that are not affected by ongoing issues with chip availability, other manufacturers that create components for Apple devices have been impacted.
According to reports in October, Apple cut its production goals for the year by more than 10 million units because of supply issues. There are a lot of moving parts for Apple to deal with, and the lack of a single tiny component can impact production.
More than 20 industry executives were interviewed by Nikkei to see what went wrong with Apple's supply issues. Apple had to reallocate components from the iPad and older iPhones to the new models because of power restrictions in China, a shortage of chips in Vietnam and Malaysia, and other issues.
The reallocation hit iPad production hard and Apple produced 50 percent fewer devices than planned, with shortages lasting well into November. Customers who order now won't be able to get a device in time for Christmas as delivery already extends into January.
According to the report, Apple told its suppliers that interest in the iPhone is slowing because of the long wait times for new devices in September and October. When manufacturing issues were fixed, Apple planned to make up for the supply constraints in early 2022, but may not get the orders it needs.
Sources that spoke to Nikkei said that Apple has asked suppliers to increase production of the phone in November, December, and January. It's not clear which take is correct, as an Apple component supplier told Nikkei that Apple has reassured them that demand has persisted and that Apple has postponed orders to a later period because of supply constraints.
The full exploration into Apple's supply chain and what led to the company's current situation with chip shortages and production delays is worth reading.
