Apple Supply Chain Sounds Alarm! Cook Admits Chip Shortage Impact, Stock Plunges Over 7%

Apple on Thursday (July 30) warned that its most popular products are facing increasingly severe supply constraints, expecting a "significant" impact, sparking Wall Street concerns. Although the company reported quarterly revenue up 16% year-on-year to $109 billion (RMB 735.4 billion; NT$3.53 trillion), partly driven by iPhone sales exceeding expectations, and profits rising 26% to $29 billion, its stock still fell more than 7% in after-hours trading.

Incoming CEO Tim Cook said current supply limitations are already affecting Mac availability and are expected to worsen, extending to iPhones and iPads. He stated: "We are currently facing some very serious supply constraints, and the supply chain has very limited flexibility to respond."

One key constraint involves critical chip components required for Apple's devices. Devices like Macs and iPhones rely on microprocessors built with "advanced process technology"—which enables faster performance. Most of these chips are manufactured by Taiwan Semiconductor Manufacturing Company (TSMC).

However, Cook emphasized that the core issue is not supply, but unexpectedly high demand—especially for iPhones and Macs. In the quarter ending June, iPhone sales rose 22% year-on-year, while Mac sales grew 25%. Earlier this year, Apple noted that demand for the iPhone 17 was extremely strong, marking the best launch performance in company history.

Cook added: "Frankly, this isn't a typical supply problem, but a demand forecasting challenge. Next quarter, we'll be busy addressing these supply challenges."

Apple also revealed that its gross margin was 2 percentage points higher than expected over the past three months due to tariff refunds. According to BBC calculations, Apple received approximately $1.1 billion in tariff refunds. Cook said the company intends to "reinvest these tariff refunds into the United States." The company previously announced plans to invest $600 billion over the next four years to expand U.S.-based manufacturing.

China remains Apple’s largest production base.

Cook also discussed Apple’s upcoming relaunch of its artificial intelligence voice assistant, Siri. In recent years, as companies like OpenAI and Anthropic launched advanced chatbots, Apple has been criticized for failing to keep Siri competitive.

The new version of Siri AI is currently in public beta testing—a phase before full rollout. Cook described it as "an enormous opportunity for Apple as we move into an AI future."

He highlighted that the ability to run directly on the device itself is "a very important strategy and could be considered a competitive weapon."

Regarding the European release of the new Siri, Cook said the company is still negotiating with EU regulators, aiming to eventually enable all users everywhere to access it simultaneously.

In contrast, Amazon saw its stock surge 10% in after-hours trading following earnings, reflecting less investor concern about its outlook.

Although Amazon reported negative free cash flow of $7.6 billion due to heavy ongoing investments in AI projects, growth in its core businesses offset Wall Street worries. Free cash flow measures how much cash remains after operating and capital expenditures. This indicates Amazon spent significantly more than it earned over the past year.

CEO Andy Jassy said the company’s cloud business, Amazon Web Services (AWS), grew revenue by 37%, the best performance in four years. "AWS is in a period of rapid growth," he said.

Overall, Amazon’s sales rose 20% year-on-year to $200 billion, while profits more than doubled to $63 billion.

Tracy Woo, an analyst at market research firm Forrester, said AWS’s growth was impressive and demonstrated that Amazon’s infrastructure investments are well-aligned with market demand rather than being premature. However, she expressed concern that Amazon recently raised its projected AI investment for this year to $220 billion from the earlier $200 billion estimate. Her main worry is whether such massive and growing investments will yield sufficient returns in the coming years.

"The bigger question is whether long-term commitments—capacity, power supply, leases, and contractual guarantees—will still pose economic risks when these facilities come online in 2027 and 2028," she said.