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Apple supply chain blow as iPhone 12 shortage hits SA

Read time 5min 20sec
The iPhone 12 Pro and Pro Max.
The iPhone 12 Pro and Pro Max.

South Africans who have ordered certain iPhone 12 models will have to wait a little longer before they get hold of the latest devices, as Apple supply chain constraints rock the local mobile market.

Local telcos have confirmed higher demand and supply chain constraints caused by the pandemic have resulted in a shortage of several iPhone 12 devices, as some local iStores battle to secure sufficient stock.

The increasing global demand for a range of products, including the power chips that manage power consumption in iPhones, coupled with supply chain disruptions caused by COVID-19, are the main causes of the shortage.

The iPhone 12 has been in huge demand since it launched last year, with global sales helping Apple to beat Wall Street expectations, as its latest financial results revealed it breached the $100 billion revenue mark for the first time in any quarter.

As the global electronics industry recovers from the repercussions of COVID-19, Apple is said to have taken a big hit, with the hiccups expected to deepen in the global smartphone market.

“The global increase in demand for both the iPhone 12 Pro and Pro Max has resulted in a shortage of in-country supply of these devices over the past few months,” says Jacqui O’Sullivan, executive for corporate affairs at MTN South Africa.

“However, we continue to engage with Apple on a weekly basis to secure future supply and greater volumes of the device in line with our customer demand.”

Discussing the potential availability of the models, O’Sullivan points out MTN’s supply of inventory is dependent on Apple lead-times and availability, which can vary depending on global demand and supply constraints. At this stage, there is no telling when MTN SA will receive stock.

“The iPhone 12 Pro Max sold out sooner than expected on our online channels. Unfortunately, due to stock constraints, we have not yet been able to replenish our stock of these devices,” she explains.

The fear of running out of essential components has led some large telcos, such as Huawei Technologies, to overstock on certain components, especially after facing the huge shortages that affected the electronics industry last year, according to reports.

Vodacom, which receives its stock directly from Apple, says: “There have been global supply constraints on certain variants of the iPhone 12 Pro and Pro Max models since launch. We can confirm that supply is improving and we are receiving a fairly consistent supply at regular intervals, and as a result, we are distributing to our stores and customers immediately.”

Cell C says it has been negotiating with suppliers and expects small quantities of the two models during April and in the coming months.

“This shortage is for all iPhone 12 Pro and Pro Max models. The supply of the latest iPhone models has been limited. The stock that we have is prioritised for current subscriber upgrades and in-store new connections.”

A Telkom spokesperson notes: “Telkom is experiencing stock shortage on the iPhone 12 Pro and Pro Max as part of a global shortage and there is no confirmation when we will receive stock. We have stock of the other Apple iPhone models except the two mentioned.”

The two new iPhone 12 models are said to have the most advanced 5G chips on the market and are highly dependent on the supply of these specific chips.

Wreaking havoc

Earlier this year, China went back into lockdown, placing over 22 million people in quarantine and disrupting manufacturing operations following another wave of COVID-19.

China is the world’s largest manufacturer of mobile phones and computers, exporting billions of dollars’ worth of goods every year, with Wuhan, known as Optics Valley, supplying a quarter of the world's optical fibre.

For Apple, the pandemic has proven to be a far greater blow to its business compared to its rivals, due to the tech giant being more sensitive to geopolitics, as a result of its significant reliance on China, both in terms of its supply chain and overall profit.

China is an important market for Apple – it is among the top five smartphone vendors in China and the only non-Chinese vendor, earning nearly 15% of its revenue from the country.

Arnold Ponela, a research analyst at IDC, says: “Apple has faced challenges with the supply of iPhone 12 due in part to a shortage of power chips and this has resulted in long waiting times for the latest iPhone. Like any other smartphone brand, Apple has been hit by device shortages as the global chip shortage is hitting electronics companies hard.

“The global microchip shortage has wreaked havoc in the smartphone industry. This has hindered the operations of Apple and many other smartphone producers, but it hasn't been a major problem until recently,” Ponela notes.

"Shortages in the supply of both the iPhone 12 and certain other models curtailed the maximum growth we could have seen from Apple in Q4 2020."

According to the International Data Corporation’s (IDCs) Worldwide Quarterly Mobile Phone Tracker, the worldwide smartphone market continued to improve in the holiday quarter of 2020, returning to familiar ground with 4.3% year-over-year growth.

While the full year 2020 declined 5.9% compared to 2019, the progress toward market recovery has been impressive, it notes.

“Apple delivered a phenomenal performance in 4Q20, returning to the number one position with 90.1 million devices shipped, driven by the success of the iPhone 12 series. This represents the highest shipment volume from a vendor in a single quarter and resulted in 23.4% market share and 22.2% year-over-year growth,” according to the report.

IDC notes shortages in the supply of iPhone 12 and certain other models curtailed the maximum growth of iPhones which Apple could have reported in Q4 2020.

“If these shortages continue, this could lead to short-term price adjustments that could hit consumer wallets hard,” concludes Ponela.

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