Apple forecasts slower sales growth as supply chain problems continue

Apple has projected slower sales growth for the current quarter, disappointing investors as ongoing supply chain problems continue to limit the company’s ability to meet strong customer demand. The weaker outlook sent Apple shares down by more than five percent in after hours trading despite the company reporting better than expected financial results for the previous quarter.

The technology giant said revenue for the quarter ending in September is expected to grow between 9 and 11 percent compared with the same period last year. That forecast fell short of market expectations, which had predicted growth of around 12 percent. Apple also expects iPhone sales to increase at a mid teens rate, slightly below analysts’ forecasts.

Chief Executive Tim Cook said the company’s biggest challenge is not weak demand but limited supplies of critical components. He explained that shortages of advanced chip manufacturing technology have reduced Apple’s ability to produce enough of its custom designed processors, especially for its Mac computers. Cook said the company is reviewing all possible options to secure additional supplies, including working with alternative memory chip suppliers.

Apple’s Chief Financial Officer Kevan Parekh told investors that the company expects gross profit margins to remain between 47 and 48 percent during the current quarter. Although supply problems remain a concern, executives said demand for Apple products continues to be stronger than expected across several product categories.

According to Cook, the company experienced particularly high demand for its Mac lineup during the recently completed fiscal third quarter. Sales of Mac computers rose by nearly 29 percent, driven by strong demand for the entry level MacBook Neo and the premium MacBook Pro models. Cook said the advanced chip manufacturing industry currently lacks the flexibility to respond quickly to unexpectedly high demand, making it difficult for Apple to increase production.

Despite concerns about future growth, Apple reported financial results that exceeded most market expectations. Revenue for the fiscal third quarter, which ended on June 27, increased by 16.4 percent to 109.42 billion dollars. Net profit reached 2.02 dollars per share, including benefits from tariff refunds provided by the United States government. Even without those refunds, earnings remained above analysts’ expectations.

The company’s strongest performance came from iPhone sales, which climbed 21.7 percent to 54.25 billion dollars. These were Apple’s highest ever third quarter iPhone sales, a period that usually experiences slower demand as customers wait for new models to be released later in the year. Analysts believe some consumers accelerated purchases because of concerns that future price increases could result from the global shortage of memory chips.

Mac sales also exceeded expectations, reaching 10.35 billion dollars during the quarter. However, iPad sales declined by 5.9 percent to 6.19 billion dollars. Cook said the decline reflected difficult comparisons with the previous year, when Apple launched a lower priced iPad model that generated unusually strong demand.

Revenue from Greater China increased by 22.4 percent to 18.82 billion dollars, although that figure still fell below market forecasts. Analysts said investors remain uncertain about whether demand will remain strong if Apple decides to raise iPhone prices during its expected product launch in September.

Although Apple continues to benefit from strong consumer interest and solid financial performance, the company acknowledged that supply chain disruptions remain a major obstacle. Executives said resolving shortages of advanced chips and memory components will be critical to maintaining growth as demand for premium technology products continues to rise.