Supply-Chain Disruptions Take a Toll on Apple, Amazon

Apple and Amazon Aren’t Immune to Supply-Chain Disruptions

Apple (AAPL) and Amazon (AMZN) posted disappointing results for their most recent quarter. Strong consumer demand was not enough to offset supply-chain issues. Shipping delays and component shortages are hurting Apple’s ability to produce more iPhones, iPads, Apple Watches, Macs, and other products. Meanwhile severe labor shortages and shipping disruptions drove Amazon’s costs higher and made it difficult for the ecommerce giant to meet demand.

The tech titans’ quarterly results underscore the difficulties which all companies, even large ones, are having with managing shipping delays, component shortgages, and a scarcity of workers. Most analysts expected these issues to have improved by now. When reporting quarterly results Apple said it was surprised by the severity of the supply-chain disruptions.

Supply-Chain Delays Worse Than Apple Expected

Apple had been able to navigate component shortages and delivery delays better than rivals, but that all changed in July when the company warned that a lack of chips would impact iPhone production. During its fiscal fourth quarter, the iPhone maker had to contend with chip shortages and factory shutdowns in Southeast Asia due to COVID-19 outbreaks. All of that caused revenue to fall short of Wall Street’s expectations. Apple’s revenue did increase 29% year-over-year to $83.4 billion but Wall Street was looking for sales of $85 billion.

Amazon’s sales in the third quarter were also lower than Wall Street forecasts. Costs at the ecommerce giant increased by $2 billion due to supply-chain issues including a lack of workers which forced Amazon to reroute merchandise. Profits fell 50% from the year-earlier third quarter.

Microsoft, Google Buck the Trend

Chip shortgages and delivery delays are also hurting other industries including automakers and home appliance companies. Both General Motors (GM) and Ford (F) posted a big decline in third-quarter profits while Whirlpool (WHR) warned there will be a lack of dishwashers and refrigerators in 2022.

Some big companies are bucking the trend including Microsoft (MSFT) and Alphabet (GOOGL). Both are less reliant on the supply chain, which helped them post strong quarterly results. Microsoft showed continued growth in cloud computing while Google’s profit nearly doubled driven by increased ad sales. However, with supply-chain chaos lasting much longer than anticipated even some large, deep-pocketed companies are not immune.

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