Is Apple’s supply chain creaking?

We’ve all heard a great deal concerning Apple’s work to build up new manufacturing bases outside China. We’ve also heard that some products have been delayed due to supply chain challenges; might these obstacles have begun to hit the company’s wider supply chain?

Can Apple get the parts?

While the first waves of the COVID-19 emergency may have passed, we’re still experiencing supply chain problems. Rising energy costs, economic challenges, foreign exchange fluctuations, political tensions — all are creating different stresses.

One of these consequences might be a reduction in available capacity for the production and distribution of spare parts. This seems to be a genuine problem with reports emerging from Apple’s third-party repair program that access to parts via the scheme has become limited. A Guardian report cites problems getting hold of spare parts, warning that prices are high and delays extensive. While the report focuses on independent repair operations that compete with Cupertino, and the substance of the claims tends to skew toward it being an unspoken battle between Apple and independents, the scenario reflects what you’d anticipate from supply chain challenges.

What is Apple doing and what effect does it have?

We know Apple to be widening its manufacturing partnerships. We also know it is working hard to increase the quantity of recycled components in its chains. In addition, there have been some relatively high-profile changes in its existing partnership arrangements. Wistron, for example, appears to have sold its interests in iPhone production in India, while Apple’s biggest partner, Foxconn, seems to have had a slight demotion in that it is no longer solely responsible for production of high end iPhones. (That’s according to analyst, Ming-Chi Kuo).

Given that components to make repairs to Apple devices have to come from somewhere, might those supply chains have been impacted? Might Apple’s attempt to convince repair shops to move to official Apple components for repair have contributed to a demand-and-supply challenge? Have companies that once made cheap replacements seen their markets shrink, and abandoned that trade?

What about demand and supply?

There’s a second set of challenges that may be affecting component availability: the trade in second-user devices. Recent data shows that Apple is eating up the second-user smartphone market. Its devices hold their value, last for many years longer than competing devices, and given the new sales records the company has set across the last two to three years, there are probably fewer devices available for cannibalization and recycling than before.

That’s a particular problem for some of the high-end components in the most recent devices. Given we saw iPhone supply slow when China shut down, might some of the most advanced components, such as those used in Digital Island sensors be in incredibly short supply? It seems likely, and within that context it may not be just third-party repair shops who can’t get the parts.

Demand seems to be growing

One final trend that may be having an impact is the acceleration of Android-to-iPhone switching. A CIRP report claims Apple is attracting more Android switchers than it has in the last five years based on new iPhone sales. Accepting that many Android users don’t migrate immediately to a new device, but dig into the second user market to get their iFix, that trend also favors less availability of older devices.

While Apple doesn’t make it easy to tear old devices apart to use for spares, it does offer recycling schemes, and if people are keeping devices for longer, they won’t be recycling fast. Which means Apple can’t authorize their components for use once broken down.

Or is all of this just a signal of change?

Apple has arguably never really been a fan of independent repairs, so it’s easy to believe it is constraining component availability. But it also seems possible that a combination of challenges means Apple’s own supply chain can’t access those parts. This lack of availability may have contributed to delayed supply of some Macs, iPhones, and iPads in recent years, as the company directed available components to whichever items it saw as most important to make at that time.

But it’s also possible to think that these component supply jitters may reflect the challenges of a supply system inevitably undergoing strain as it is reconfigured for a new global reality.

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