Apple Inc is likely to slash production of its iPhone 13 by as many as 10 million units due to the global chip shortage, Bloomberg News reported on Tuesday, citing people familiar with the matter.
The company was expected to produce 90 million units of the new iPhone models by the end of this year, according to Bloomberg.
The report said Apple told its manufacturers that the number of units would be lower because chip suppliers including Broadcom Inc and Texas Instruments are struggling to deliver components.
Shares of Apple fell 1.2% in after-hours trading, while Texas Instruments and Broadcom were both down about 1%.
Apple declined to comment. Broadcom and Texas Instruments did not immediately respond to Reuters requests for comment.
In July, Apple forecast slowing revenue growth and said the chip shortage, which had started hitting its ability to sell Macs and iPads, would also crimp iPhone production. Texas Instruments also gave a soft revenue outlook that month, hinting on chip supply concerns for the rest of the year.
The chip crunch has put immense pressure on industries from automobiles to electronics, leading many automakers to temporarily suspend production.
With its massive purchasing power and long-term supply agreements with chip vendors, Apple has weathered the supply crunch better than many other companies, leading some analysts to forecast that iPhone 13 models released in September would have a strong sales year as consumers looked to upgrade devices for 5G networks.
Jeff Fieldhack, research director for Counterpoint Research, said the reported Apple production cut could also be part of the iPhone maker’s normal launch process of over-ordering devices to be prepared for an initial customer rush and then trimming orders as sales trends become clearer.
Fieldhack said iPhone 13 sales appear to be healthy and higher than last year’s iPhone 12, and Counterpoint is not changing its estimate of 85 million to 90 million iPhone 13 sales for the fourth quarter.
Grab’s $40 bln Nasdaq debut to set tone for Southeast Asian tech listings
Grab, Southeast Asia’s biggest ride-hailing and delivery firm, makes its market debut on Thursday after a record $40 billion merger with a special purpose acquisition company (SPAC), in a listing that will set the tone for other regional offerings.
The backdoor listing on Nasdaq marks the high point for the nine-year-old Singapore company that began as a ride-hailing app and now operates across 465 cities in eight countries, offering food deliveries, payments, insurance and investment products.
The biggest U.S. listing by a Southeast Asian company follows Grab’s April agreement to merge with U.S. tech investor Altimeter Capital Management’s SPAC, Altimeter Growth Corp and raise $4.5 billion, including $750 million from Altimeter.
There is scope for many players in the fragmented food delivery and financial services markets in Southeast Asia, a region of 650 million people, but the road to profitability could be a long one, analysts say.
Grab’s flotation “will provide a bigger cash buffer” to its “cash burn”, S&P Global Ratings said in a note. But the company’s “credit quality continues to be constrained by its loss-making operations, and free operating cash flows could be negative over the next 12 months.”
Southeast Asia’s internet economy is forecast to double to $360 billion in gross merchandise value by 2025, prompting Grab’s rivals, including regional internet firm Sea Ltd and Indonesia’s GoTo Group, to bulk up.
GoTo plans a local IPO in 2022 after completing an expected $2 billion private fundraising, sources have told Reuters. A U.S. listing will follow the Jakarta offering.
“Longer term, we’re really excited about Grab Financial Group,” a unit of the company, said Chris Conforti, partner at Altimeter Capital. “I think the bell curve on that is much wider in terms of what the outcome could be, but it could be extremely large.”
Bonanza for backers
Grab was founded by Anthony Tan, its chief executive, and Tan Hooi Ling, who developed the firm from an idea for a Harvard Business School venture competition in 2011. The two Tans are not related.
CEO Tan, 39, expanded Grab into a regional operation with a range of services, after launching it as a taxi app in Malaysia in 2012. It later moved its headquarters to Singapore.
“What we have shown to the world is that home grown tech companies can develop great technology that can compete globally, even when international players are in town,” Tan told Reuters in an interview on Wednesday. “We can compete and win.”
He will end up with 60.4% voting rights along with Grab’s co-founder, and president Ming Maa, but control only 3.3% stake with them.
To mark the New York listing, Grab and Nasdaq will hold a bell-ringing in a luxury hotel in Singapore in the middle of the Asian night. About 250 people, including executives from the exchange, Grab’s investors and other partners are to attend.
Grab’s listing brings a payday bonanza to early backers such as Japan’s SoftBank and Chinese ride-hailing giant Didi Chuxing, which invested as early as 2014.
They were later joined by the likes of Toyota Motor Corp, Microsoft Corp and Japanese megabank MUFG. Uber became a Grab shareholder in 2018 after selling its Southeast Asian business to Grab following a five-year battle.
In September, Grab cut its full-year adjusted net sales forecasts, citing renewed uncertainty over pandemic curbs on movement.
Third-quarter revenue fell 9% from a year earlier and its adjusted loss before interest, taxes, depreciation, and amortisation (EBITDA) widened 66% to $212 million. GMV in the quarter rose to a record $4 billion.
It aims to turn profitable on an EBITDA basis in 2023.
JPMorgan and Morgan Stanley were the lead placement agents on the fundraising, while Evercore and UBS were the co-placement agents.
Apple tells suppliers demand for iPhone 13 lineup has weakened: Bloomberg News
Apple Inc has told its parts suppliers that demand for the iPhone 13 lineup has slowed, Bloomberg News reported on Wednesday, citing people familiar with the matter, signaling that some consumers have decided against trying to get the hard-to-find item.
The company had earlier cut production of iPhone 13 by as many as 10 million units due to a global chip shortage, but now it has informed vendors that those orders may not materialize, the report said.
Apple and some of its suppliers 3M Co, Broadcom Inc and Advanced Micro Devices Inc did not immediately respond to requests for comments from Reuters.
A global chip crunch, initially due to high demand for smartphones and personal gadgets during the coronavirus pandemic, has affected the auto industry and disrupted production at companies ranging from Apple to GM.
In October, Apple’s Chief Executive Tim Cook warned that the impact of supply constraints, which cost the company $6 billion in sales in the fiscal fourth quarter, will be worse during the holiday quarter and that chip shortage was affecting most of the company’s products.
Nikkei reported last month that Apple even cut back production of iPad tablets to allocate more components to the iPhone 13.
Omicron rapidly dominating in South Africa; U.S. reports first case
Heavily mutated Omicron is rapidly becoming the dominant variant of the coronavirus in South Africa less than four weeks after it was first detected there, and the United States on Wednesday became the latest country to identify an Omicron case within its borders.
The first known U.S. case was a fully vaccinated person in California who returned to the United States from South Africa on Nov. 22 and tested positive seven days later.
The person had mild symptoms and was in self-quarantine, Dr. Anthony Fauci, the top U.S. infectious disease official, told reporters at the White House.
Late on Tuesday, airlines in the United States were told to hand over the names of passengers arriving from parts of southern Africa hit by Omicron, according to a U.S. Centers for Disease Control and Prevention letter seen by Reuters.
Key questions remain about the new variant, which has been found in two dozen countries, including Spain, Canada, Britain, Austria and Portugal. The UAE reported its first case on Wednesday, the second Gulf country after Saudi Arabia.
Early indications suggesting Omicron may be markedly more contagious than previous variants have rattled financial markets, fearful that new restrictions could choke off a tentative recovery from the economic ravages of the pandemic.
South Africa’s National Institute for Communicable Diseases (NICD) said early epidemiological data suggested Omicron was able to evade some immunity, but existing vaccines should still protect against severe disease and death.
It said 74% of all the virus genomes it had sequenced last month had been of the new variant, which was first found in a sample taken on Nov. 8 in Gauteng, South Africa’s most populous province.
The number of new cases reported in South Africa doubled from Tuesday to Wednesday.
World Health Organization (WHO) epidemiologist Maria van Kerkhove told a briefing that data on how contagious Omicron was should be available “within days.”
BioNTech’s CEO said the vaccine it makes in a partnership with Pfizer was likely to offer strong protection against severe disease from Omicron.
|Pedestrians wearing protective masks, amid the coronavirus disease (COVID-19) outbreak, make their way at the Ameyoko shopping district in Tokyo, Japan, December 1, 2021. Photo: Reuters|
‘Prepare for the worst’
The president of the European Union’s executive body said there was a “race against time” to stave off the new variant while scientists establish how dangerous it is. The EU brought forward the start of its vaccine rollout for 5-to-11-year-olds by a week to Dec. 13.
“Prepare for the worst, hope for the best,” Ursula von der Leyen, president of the European Commission, told a news conference.
She said that full vaccination and a booster shot provided the strongest possible protection, according to scientists – a view echoed by Fauci.
But WHO emergencies director Mike Ryan criticized developed countries pushing booster shots for large parts of their fully vaccinated populations when vulnerable people in many poorer regions have had no vaccination at all.
“There is no evidence that I’m aware of that will suggest that boosting the entire population is going to necessarily provide any greater protection for otherwise healthy individuals against hospitalization or death,” he said.
Britain and the United States have both expanded their booster programs in response to the new variant.
The WHO has noted many times that the coronavirus will keep producing new variants for as long as it is allowed to circulate freely in large unvaccinated populations.
|Passengers wearing masks to prevent the spread of the coronavirus disease (COVID-19), walk at a subway station in Hong Kong, China December 1, 2021. Photo: Reuters|
Some 56 countries were reportedly implementing travel measures to guard against Omicron as of Nov. 28, the WHO said.
U.N. Secretary-General Antonio Guterres slammed what he called “travel apartheid.”
“Blanket travel bans will not prevent the international spread and they place a heavy burden on lives and livelihoods,” the WHO said, while advising those who were unwell, at risk, or 60 years and over and unvaccinated to postpone travel.
The United States has barred nearly all foreigners who have been in one of eight southern African countries.
Hong Kong added Japan, Portugal and Sweden to its travel restrictions. Malaysia temporarily barred travelers from eight African countries and said Britain and the Netherlands could join the list.
Fitch Ratings said it lowered its global air passenger traffic forecasts for 2021 and 2022.
|A person wearing a face mask shops, as the spread of the coronavirus disease (COVID-19) continues in London, Britain, November 30, 2021. Photo: Reuters|
“It feels a little bit like we are back to where we were a year ago,” said Deidre Fulton, a partner at consultancy MIDAS Aviation, at an industry webinar. “And that’s not a great prospect for the industry and beyond.”
Wall Street’s major averages fell more than 1% on Wednesday, erasing morning gains, on investor angst over the first U.S. case, along with concerns about inflation. Crude oil prices also fell.
Fauci said it could take two weeks or more to gain insight into how easily the variant spreads from person to person, how severe the disease is that it causes, and whether it can bypass the protections provided by the vaccines currently available.
“We don’t have enough information right now,” said Fauci, adding that the variant’s molecular profile “suggests that it might be more transmissible, and that it might elude some of the protection of vaccines. … We have to be prepared that there’s going to be a diminution in protection.”
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