Apple, Microsoft Detail Supply Chain Constraints in Earnings Calls

Both Microsoft and Apple's latest earnings calls took place last night, with one major theme in common: the ongoing component shortage. Despite issues in the supply chain, there still appears to be strong demand for new devices.

Microsoft, in its Q3 2021 call, saw mixed performance in its "more personal computing" segment, which includes Windows, search, gaming and Surface. Overall, revenue for the group increased 1.2 billion, or 9%.

However, Windows in OEM systems suffered slightly. "Windows OEM revenue decreased 3% with continued PC demand impacted by supply chain constraints, on a strong prior year comparable in OEM non-Pro," according to Microsoft. "Windows OEM Pro revenue decreased 2% and Windows OEM non-Pro revenue decreased 4%.

Surface revenue was down $348 million (20%), which Microsoft attributed to "supply chain constraints."

Microsoft saw $357 million (11%) thanks to the Xbox Series X and Xbox Series S, though content and services decreased $128 million.

Apple, in its Q3 2021 results, claimed to succeed in spite of supply chain problems. Chief financial officer Luca Maestri said that the Mac set a quarter record of $8.2 billion, (up 16%) and that the iPad had revenue of $7.4 billion (up 12%) "in spite of significant supply constraints."

Apple recently launched a new iPad Pro and iMac, both powered by the company's M1 processor.

In a forward looking statement, Maestri claimed that "we expect supply constraints during the September quarter to be greater than what we experienced during the June quarter," specifically calling out the iPhone and iPad as likely being affected.

Apple chief executive Tim Cook said that most supply constraints are part of an "industry shortage," but also sometimes that demand has been beyond what the company had expected.

Throughout the pandemic, there has been massive demand for personal computers, gaming consoles and other devices for people to work and play at home. The shortages have also affected the automobile industry and home appliances.

These two earnings calls both suggest that the component shortage isn't over, and may not be over by the end of the year, and that to at least some degree, all of that demand is still ongoing.