Over the past year, the world has been dealing with a chip
shortage crisis, impacting the supply of a wide-variety of tech-related products,
but somehow, Apple was not only able to survive through the chip shortage,
but they’ve absolutely THRIVED and have continued to sell more products than they did years prior.
So in this video, I’m gonna go into exactly how Apple was able to pull this
off despite the negative environment, but first, I want to get into the other industries
and companies that were impacted to give you a good idea of how impressive this really is.
Last year, many car companies halted production of their vehicles because of the chip shortage,
like Ford with their most popular F-150, General Motors cutting production at multiple plants,
Daimler shut down production of a few Mercedes-Benz models in Alabama, and many more.
And now, in 2021, it’s actually starting to get worse, with the chip shortage
expected to cost the auto industry $110 billion in revenue this year.
Now in terms of tech, PS5’s have been in a shortage for many months,
XBOX consoles have also been out of stock everywhere,
and graphics cards for desktop PCs have been in a huge shortage over the past year.
Even Apple’s main competitors are getting hit hard, like Google saying
that the Pixel 5a will only launch in two countries, likely due to a lack of chips.
Smartphone maker Xiaomi says they may have to raise prices of their products
because of the shortage.
Samsung literally confirmed that the Galaxy Note 21 is not coming this
year because of the chip shortage, which is absolutely insane.
LG recently announced that they’re quitting the smartphone business
entirely since sales haven’t been doing so well.
Huawei recently launched their new P50 and P50 Pro chips
without 5G support because of sanctions and the chip shortage.
In the PC market, Dell, HP and Lenovo have all recently warned about low chip supply
increasing the production costs of their computers, causing them to raise prices.
Asus and MSI are raising their graphics card prices again,
Microsoft reported lower Surface product sales due to the chip shortage,
and Acer recently warned that the shortage will impact laptop production until next year.
So it’s pretty obvious that every tech-related industry is getting hit pretty hard,
but if you take a look at Apple, they’ve somehow managed to escape
the grips of the chip shortage and post record-breaking numbers.
Ever since the pandemic began, Apple has been destroying Wall street’s expectations
for revenue and growth, with a record 81.4 billion for Q3 2020.
And even though they delayed the iPhone 12 by a month, they still beat expectations for Q4.
They posted multiple record-breaking revenues up 21% year over year for Q1 of 2021.
For Q2, it was even better, with sales up 54% year over year, another blowout quarter.
And just a couple of weeks ago, they did it again, up 36% year over year.
So Apple has obviously been doing incredibly well despite many other companies struggling through
the chip shortage, and I believe it was due to a lot of quick and genius action from Apple,
along with a little bit of perfect timing, so let’s now get into how they pulled it off!
Last year, the pandemic was causing issues like lockdowns, store closures and much more, which is
a huge problem because Apple hosts various events throughout the year to show off their products.
But instead of cancelling their WWDC event in June like many other companies would do,
they resorted to making it online-only, and they absolutely went all out.
The production quality of WWDC 2020 blew everyone away, with creative background sets,
transitions, animations and excellent cinematography.
I still don’t know how they were able to pull it off in such a short time,
especially since they had to film and edit many developer training videos as well.
On top of that, they acted very quickly with a marketing campaign
embracing people working from home, with this creative and funny ad
showing the various ways Apple products can help you with work.
And despite having their iPhone 12 delayed, they still hosted a September event to release other
products that were ready to show off, like the iPad Air and the Apple Watch.
And for the first time ever, they hosted three events last Fall, which was absolutely genius
because it helped them spread their products out and have as big of a marketing push as possible.
And many have said that Apple’s Spring event in April was probably the best they’ve ever seen,
with the release of the 24” iMac and the M1 iPad Pro.
So marketing-wise, Apple absolutely killed it, not holding back like many other companies did,
and because of that, sales have been skyrocketing.
The iPhone 12 reached 100 million sales in the first 7 months of launch,
actually outperforming the iPhone 11 which was released before the pandemic hit.
Amazingly, Apple sold 33% more iPads in 2020 than the previous year,
and Mac sales have been skyrocketing ever since the M1 Macs launched late last year.
So the big question is this:
How was Apple able to grow this much despite the chip shortage that everyone else was impacted by?
Well, the main part of the story has to do with
TSMC, the biggest and most advanced chip manufacturer in the world,
which also happens to be the company that has been making Apple-designed chips for many years.
So every single iPhone since the iPhone 7 comes with a chip manufactured by TSMC.
And because of TSMC being ahead of the game in terms of chip-making technology,
Apple’s iPhones and iPads have been 1 to 2 years ahead of the main competition from Qualcomm.
And it isn’t stopping because TSMC has just announced plans to have 2nm chips start production
in 2024, with construction of a new plant beginning in early 2022, which is incredible.
And luckily for Apple, they’re actually TSMC’s biggest and most important customer.
We know that because TSMC themselves said that they would prioritize Apple and car
manufacturers during the chip shortage, with Apple getting dibs on the best chips out there,
just like they have in the past when they reserved 100% of TSMC’s
5nm production capability, and their entire next-gen 3nm production capacity.
And Apple is already in talks with TSMC over their 2nm chips for future iPhone models in 2024.
And that right there is another part of Apple’s genius,
because they think and plan their products years in advance, and since they’re taking
care of TSMC in terms of booking chips in advance, they’ve become TSMC’s #1 priority.
And that is one of the major reasons why they haven’t really been impacted
by the chip shortages that much.
Even today, almost all of their products are in stock and ready to ship,
like their iPhone 12 that has exceeded sales expectations.
On Amazon, you can get an M1 Mac Mini for only $600 with the coupon code and
get it in two days, along with the M1 MacBook Pro which is actually $200 off.
Even the M1 iPad Pro is $100 off right now, so Apple is obviously not facing
any supply shortages right now, even after selling record-breaking amounts of products.
And now, it seems like Apple is continuing to lock in chip supply
to make sure they have as many chips as possible.
And a big reason why Apple has been able to do this is because of their massive amount of cash
on hand, which allowed them to continue ordering massive amounts of the best chips out there,
as well as pay for higher transportation costs.
And now, it seems like Apple is using that extra cash to continue to
lock in chip supply to make sure they have as many chips as possible
to weather the chip supply storm, which Intel’s CEO believes will last all the way up into 2023.
And this brings us to the perfect timing of Apple
ditching Intel and switching to their own Apple-designed chips built by TSMC.
Back in May of last year, Apple updated their MacBook Air and MacBook Pro
with Intel’s latest Skylake 10nm chips, but there was definitely some weirdness going on.
First off, for some reason, the base MacBook Pro stuck with an
8nm chip instead of getting a new 10nm chip like the more expensive $1800 model received.
Well, as it turns out, Intel admitted that their 10nm Ice Lake chips
were doing poorly in terms of performance and yields.
And later that year, it became apparent that 10nm chip yields were actually really bad, and
this is on top of Intel delaying their 7nm chips until 2023.
And now, Intel is delaying their Sapphire Rapids server chips yet again.
So it’s pretty clear that if Apple stuck with Intel, their Mac sales probably wouldn’t be
looking so good right now, especially with the whole chip shortage impacting Intel right now.
But thankfully, Apple literally had perfect timing when they announced
the switch of their Mac lineup to their own Apple Silicon chips that are built by TSMC.
And Apple was absolutely genius by only having a single M1 chip design
for four different Mac devices and the M1 iPad Pro,
meaning that TSMC could mass manufacture this one chip to help improve yields as much as possible,
and because of that and the impressive performance of the M1, Mac sales have been
breaking records in terms of sales growth quarter after quarter since the release of the M1 chip.
And now, Apple isn’t stopping!
They’ve recently ordered 100 million A15 chips for their upcoming iPhone 13
and brought on additional suppliers to meet production targets.
And they even started mass production of the M1X chip
months ago to make sure they’re gonna have enough supply when the 14
and 16” MacBook Pro are released this fall, which have also just entered mass production,
with Apple intending to sell as many as 800,000 units by the end of November, which is massive!
And it was recently reported that TSMC’s Arizono plant
will begin mass production in 2024 to build even more Apple chips.
So if I were to sum up the reasons for how Apple thrived through the chip shortage, it
would be due to Apple’s relentless forward-looking strategy with reservations of chips from TSMC,
combined with their genius marketing plans embracing the lockdowns and how quickly
they were able to switch to online-only events which were somehow better than previous events.
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