Apple's Chip Supply Constraints Slow September Quarter Growth
Apple's supply chain issues are causing slower growth in its September quarter, primarily due to chip manufacturing constraints. The company is facing difficulties in securing advanced-node manufacturing capacity for its system-on-chips, affecting iPhone, Mac, and iPad production.
The $38.6 billion in inventory and vendor non-trade receivables represents a 53% year-over-year increase, indicating a significant supply chain build-up rather than a finished-goods backlog. This has raised questions about whether the pipeline will convert to revenue once chip supply improves or signals deeper demand or working-capital issues.
The investment thesis for Apple hinges on whether this pipeline converts to revenue once chip supply improves or signals deeper demand or working-capital issues. At around 32 times forward earnings, the company is rated a Hold until working capital releases and stronger product revenue confirm supply, not demand, as the core problem.