Apple Faces iPhone Duo Supply Shortages Ahead of Christmas Shopping Season

Apple has warned that it cannot predict when supplies of its new foldable iPhone Duo will meet customer demand. The shortage comes as the company approaches the crucial Christmas trading period.

The iPhone Duo sold out just over a week after its launch, despite carrying a price tag of nearly $2,000. Apple said sourcing key components remained difficult and described the balance between supply and demand as hard to predict.

The company is also facing rising costs for memory chips. New chief executive John Ternus said the technology sector was experiencing unprecedented increases in memory prices.

The pressure comes as artificial intelligence companies invest billions of dollars in data centres. Their growing demand for computing infrastructure is also affecting the wider technology supply chain.

Foldable iPhone Draws Strong Demand Despite Screen Concerns

Ternus introduced the iPhone Duo after taking over from former chief executive Tim Cook in September.

The device represents Apple’s first major smartphone design change in almost 20 years. Its early reception has been strong, according to company executives.

Ternus said he was thrilled with the initial response. Chief Operating Officer Sabih Khan added that Apple was working to deliver the device to customers as quickly as possible.

However, some buyers have reported problems with the foldable screen. Last week, Apple said it would replace affected handsets after a small number developed cracks along the inside fold.

During its latest financial results announcement on Monday, Apple’s executives did not discuss the reported screen problems.

Apple Reports Record iPhone Revenue

Apple’s latest financial results covered the three months ending September 26. They did not include iPhone Duo sales, as the foldable model launched at the end of October.

Nevertheless, the company reported record annual global iPhone sales.

iPhone revenue increased 17% to $57 billion (£42 billion) during the quarter. Mac revenue also rose 27% to a record $10.7 billion.

Overall, Apple’s sales increased to $114 billion from $102 billion. Pre-tax profit climbed to $36.1 billion from $32.8 billion.

However, some product categories recorded weaker results. iPad sales declined 10%, while revenue from wearable products, including headphones and watches, fell 7%.

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Chip Shortages Continue to Affect Apple Products

Apple said supply constraints were affecting most of its devices. Difficulties securing sufficient advanced-node microprocessors were partly responsible.

These processors use advanced chip technology to help devices operate more efficiently. Apple has sourced much of this manufacturing capacity through Taiwan-based TSMC.

Khan warned that supply pressures could continue into next year. He said iPads and Macs were likely to face particular challenges.

The company also attributed some of the pressure to what it described as unexpected demand for its products.

AI Boom Drives Memory Costs Higher

Rising memory prices present another challenge for Apple.

Ternus said the company was experiencing unprecedented increases in memory costs. Memory allows devices to store data, including applications, photographs and messages.

Demand for data-centre capacity has surged as AI chatbots and platforms become more widely used. Companies such as OpenAI and Anthropic are among those investing in the technology.

This expansion is increasing pressure on the supply and cost of memory used across the technology industry.

Former chief executive Tim Cook had previously described a sudden increase in data-centre costs as a “thousand year flood”.

Apple has also raised prices across nearly all its hardware products by around 20%.

Investors Assess Apple’s Margins and Market Performance

Sunil Krishnan of Aviva Investors described Apple’s latest results as reasonably solid. Speaking to the BBC’s Today programme, he also highlighted the performance of its iPhone business.

However, investors remain concerned about the company’s profit margin outlook and rising memory chip costs.

Krishnan said margins well above 45% were impressive for an established company, despite the wider cost pressures.

Apple shares nevertheless fell 1.8% in after-hours trading.

The company now faces the challenge of managing strong product demand, securing essential components and controlling rising costs. Its ability to restore supply of the iPhone Duo will be particularly important during the Christmas shopping period.