Apple can't rest easy amid chip shortage

Apple has delivered another great report card. On July 28, according to Apple's third quarter financial report for fiscal year 2021, its revenue and net profit both achieved substantial growth, and its gross profit margin reached 43.3%. Except for the Mac and iPad, which saw a decline in growth due to chip issues, other product lines achieved strong growth. Some analysts believe that the replacement cycle brought by the iPhone 12 series has not yet ended, and to a certain extent has filled the gap left by Huawei phones. The launch of a new generation of iPhones next quarter may continue this trend, but Xiaomi's overtaking in the second quarter also sounded the alarm for Apple. The competitive pressure in the mobile phone market has not been reduced because of the part missing from Huawei.

Performance affected by chip shortage

The financial report shows that Apple's net revenue in the third quarter of fiscal year 2021 was US$81.434 billion, a 36% increase from US$59.685 billion in the same period of the previous fiscal year, and its net profit was US$21.744 billion, a year-on-year increase of 93%, exceeding market expectations of US$16.616 billion.

Specifically for each major product line, Apple's iPhone revenue in the third fiscal quarter was US$39.57 billion, a year-on-year increase of 49.78%, exceeding Wall Street's forecast of US$34.01 billion; service revenue was US$17.48 billion, a year-on-year increase of 33%, exceeding Wall Street's forecast of US$16.33 billion; wearable devices, home and accessories revenue was US$8.76 billion, a year-on-year increase of 40%, exceeding Wall Street's forecast of US$7.8 billion; Mac revenue was US$8.24 billion, a year-on-year increase of 16%, exceeding Wall Street's forecast of US$8.07 billion; iPad revenue was US$7.37 billion, a year-on-year increase of 12%, exceeding Wall Street's forecast of US$7.15 billion.

Apple's third fiscal quarter, which is the second quarter of the calendar year, is usually a slow season for sales. However, as Apple's largest source of revenue, iPhone revenue still achieved a substantial increase. Apple CEO Tim Cook revealed that this is not only due to users upgrading to new phones, but also because many Android users switched to the iPhone camp and bought their first iPhone. The number of users of both types achieved double-digit growth.

It can also be seen from the financial report that the service sector has become Apple's second largest source of revenue after the iPhone, and its revenue even exceeds the total revenue of the two major businesses of Mac and iPad. Cook said that the company's platform already has 700 million users, higher than the 660 million in the previous fiscal quarter.

Also worth noting is the wearable devices, home and accessories business, which also has revenue exceeding that of Mac and iPad. As for the Mac and iPad business, Apple said that Mac revenue set a record for the same period in history, and iPad revenue hit a record high in nearly a decade, but the growth rate has declined. "The impact of the chip shortage on the company's revenue is less than $3 billion," Cook said.

Slipped to third place globally

Specifically for each major region, Apple's net revenue from the Americas in the third fiscal quarter was US$35.87 billion, compared with US$27.018 billion in the same period last year; net revenue in Europe was US$18.943 billion, compared with US$14.173 billion in the same period last year; revenue in Greater China was US$14.76 billion, up 58.2% from US$9.33 billion in the same period last year; net revenue in Japan was US$6.464 billion, compared with US$4.966 billion in the same period last year; net revenue in other Asia-Pacific regions was US$5.395 billion, compared with US$4.199 billion in the same period last year.

Cook emphasized that the Chinese market had a particularly strong response to the iPhone 12 Pro, but in comparison, the Americas and Europe remained Apple's top two revenue sources.

Although iPhone sales and performance have both increased, Apple's situation is not optimistic in terms of rankings, both in the global and Chinese markets.

Data released by market research firm IDC on the same day showed that in the second quarter of this year, vivo shipped 18.6 million units in the Chinese mobile phone market, with a market share of 23.8%, ranking first; OPPO shipped 16.5 million units, with a market share of 21.1%, ranking second; Xiaomi shipped 13.4 million units, with a market share of 17.2%, ranking third; Apple shipped 8.6 million units, with a market share of 10.9%, ranking fourth; Honor entered the top five as an independent individual for the first time, with shipments of 6.9 million units and a market share of 8.9%.

In the global smartphone market, research data released by Canalys showed that in the second quarter of 2021, Xiaomi surpassed Apple and ranked second with a market share of 17%, only 2% away from Samsung, which ranked first; Samsung ranked first with a market share of 19%; Apple ranked third with a market share of 14%; OPPO and vivo ranked fourth and fifth with a market share of 10%.

The factors that led to this result may, to a certain extent, be due to the fact that the audience overlap between Apple and Xiaomi is not high. One tends to be in the mid-to-high-end market, and the other tends to be in the mid-to-low-end market. This is also the reason why the profit shares of Apple and Xiaomi in the mobile phone industry are very different.

For the next fiscal quarter, Apple Chief Financial Officer Luca Maestri expects revenue to grow by double digits in the fourth quarter, but the growth rate will slow compared to the third quarter, mainly due to exchange rate fluctuations, limited supply of iPhones and iPads, and slower growth in the service business.

If nothing unexpected happens, Apple will hold its autumn press conference next quarter. It is expected that the launch of the new generation of iPhone will once again drive a wave of Apple mobile phone replacement. Beijing Business Daily reporters interviewed Apple China about the specific time of the press conference, but as of press time, the other party has not responded.

Judging from Apple's performance in the past few quarters, the company does not seem to be going downhill as many industry insiders had expected, but has achieved record highs. "The reputation of Apple products and the loyalty of Apple users are still relatively high, but Chinese brands such as Xiaomi, OPPO and vivo are trying to seize the market gap left by Huawei. If Apple wants to maintain its current position, it cannot relax for a moment," said industry observer Hong Shibin.