Dips for Tesla, but chips no longer down at Apple

Semiconductor shortage has forced companies to prioritise biggest sellers

Apple reported quarterly earnings that handily beat expectations, with sales ahead of forecasts for every category except iPads.   Photograph: David Paul Morris/Bloomberg

Apple reported quarterly earnings that handily beat expectations, with sales ahead of forecasts for every category except iPads. Photograph: David Paul Morris/Bloomberg

 

When the global semiconductor shortage first began to escalate, it seemed as if every major manufacturer trying to reach ever higher volumes of production were either in the same boat or soon to join each other on it. The list of blue-chips at risk of becoming no-chips lengthened every day.

This week’s contrasting market updates from Apple and Tesla, however, show that even among the ranks of mega corporations, not everyone is suffering equally anymore.

It was a torrid Thursday for Elon Musk’s company, with the Texas-based electric vehicle maker seeing its stock plunge almost 12 per cent, wiping $109 billion (€98 billion) off its valuation in a single day. Incredibly, this isn’t even the first time Tesla has seen its market value sink by more than $100 billion in a trading session.

The key reason for this latest plummet is that Musk had late on Wednesday told stock analysts that the company would not be bringing any new vehicles to market in 2022, limiting its growth prospects. And the decision to focus on its existing big sellers – its Model 3 and Model Y vehicles account for almost all of its deliveries – has been dictated by supply chain woes.

“Both last year and this year, if we were to introduce new vehicles, our total vehicle output would decrease,” Musk explained.

That’s bad news for anyone hanging out for Tesla’s Cybertruck, Semi or Roadster models to arrive this year, and will be of particular interest to anybody who has bet the farm on the company’s volatile stock.

Cook’s chips

At Apple, on the other hand, the chips are no longer down. In late 2021, chief executive Tim Cook was busy warning that shortages could cost the iPhone maker more than $6 billion (€5.4 billion) in sales during the Christmas period. Earlier this week, however, it reported quarterly earnings that handily beat expectations, with sales ahead of forecasts for every category except iPads.

While chip supply is still Apple’s “biggest issue” – and iPad sales likely fell year-on-year because the tech giant prioritised other devices in its manufacturing – its supply constraints in the current quarter will be lower than they were in the final three months of 2021, Cook declared.

Buying power counts, clearly. The most valuable company in the world is, after all, capable of shrugging off the supply crunches that continue to curtail the ambitions of lesser beasts.

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