Apple expects a loss of up to 8 billion dollars due to supply bottlenecks
The iPhone maker's shares fall after the company warned of a "much greater" impact from restrictions and bottlenecks in the current quarter
Gabriel ThomasOctober 5, 2026
Apple management warned that the company could suffer a loss of up to $8 billion in the current quarter amid potential supply chain shortages and factory closures in China.
"Supply shortages caused by Covid-related disruptions and industry-wide silicon shortages are affecting our ability to meet customer demand for our products," Apple CFO Luca Maestri told analysts on Thursday.
"We anticipate these restrictions to be in the range of $4 billion to $8 billion, which is significantly higher than what we experienced in the March quarter," he said, adding that "Covid-related disruptions will also have some impact on customer demand in China".
Apple shares, which rose 4.5 percent on Thursday, initially gained 2 percent in after-hours trading after the iPhone maker's revenue in the first three months of 2022 rose 9 percent year-on-year to 97, $3 billion was up. This was well above the $94.1 billion expected by analysts.
However, after the conference call in which executives outlined the challenges facing the company, shares took a different tack, falling more than 4 percent.
"Covid is difficult to predict," said Tim Cook, Apple's chief executive officer. "And I think we're currently doing a reasonable job of navigating in a difficult environment."
The comments made it clear that the tech giant, known for its sophisticated supply chain, is bracing for an extended period of uncertainty this year.
Before the pandemic, Apple routinely provided quarterly sales guidance, but stopped doing so as the coronavirus spread. The June quarter's forecast revenue shortfall of $4 billion to $8 billion compares to a more than $6 billion dip in revenue in the December quarter and is the clearest warning Apple has issued since February 2020, when the company anticipated a "slower return to normal conditions than we expected".
The bearish comment on supply chain issues came after Apple's results for the March quarter showed a 6 percent increase in net income to $25 billion, making it Apple's third-most profitable quarter in the company's history despite not being a holiday season .
The result was boosted in part by record sales from Apple's services division, which rose 17 percent to $19.8 billion. This area includes revenue from the App Store, iCloud subscriptions, and a growing number of digital music and entertainment services.
With gross margins of over 72.6 percent, the division played a paramount role in Apple's profits. Profit of $14.4 billion in the last quarter alone was almost twice as high as Facebook parent Meta's net profit of $7.5 billion.
Maestri said the fast-growing services division now has more than 825 million subscribers, up 165 million from a year earlier.
Total iPhone sales rose 5.5 percent to bring in $50.6 billion, accounting for 52 percent of total sales, confirming that the 5G super cycle of upgrades that began with the iPhone 12 in late 2020 continues.
Mac sales rose 15 percent to $10.4 billion. Wearables sales, which includes the Watch and AirPods, rose 12 percent to $8.8 billion.
iPad sales were disappointing, falling 2 percent to $7.7 billion. Maestri justified this with silicon bottlenecks in the supply chain.
Apple has reportedly preferred the chips it has for the iPhone over the iPad.
Regionally, the results were mixed. In the Americas, sales rose 19 percent to $40 billion, while in Europe they grew 4.6 percent to $23.3 billion and in China they grew 3.5 percent to $18.3 billion. In contrast, sales in Japan were flat at $7.7 billion, while sales in the rest of Asia-Pacific fell 6.7 percent to $7 billion.
"Although China grew just 3 percent, we believe it was better than feared as the region's smartphone industry declined sharply," said Angelo Zino, an analyst at CFRA Research.
Apple's board of directors also approved an additional $90 billion in share buybacks and increased its dividend by 5 percent, its 10th consecutive annual increase, Maestri said.
Analysts had called the report more important than usual amid widespread concerns about the health of consumer spending amid higher inflation.
Zino praised Apple's "aggressive" actions to please Wall Street with share buybacks and dividends, and called the overall results "extremely" good.
