What's Up With Apple: 100 Million iPhone Chips, Upcoming Quarterly Earnings

The Apple Inc. (NASDAQ: AAPL) supply chain is buzzing. Even though a date for the company’s annual new product announcements hasn’t been given, there is plenty of speculation about what’s in store.

Nothing is more important to the company than the next iPhone. In a Monday morning report, a Chinese-language publication named cnBeta cited unnamed sources claiming that Apple has ordered more than 100 million A15 Bionic chips this year for the iPhone 13, which may or may not be the name of the new iPhone.

The new system-on-a-chip (SoC) is said to retain the six-core design of the A14 chip used in the iPhone 12 and will use the same 5-nanometer (nm) design with some design tweaks to boost performance and extend battery life.

The cnBeta report attributes the massive chip order partly to Apple’s concern over the global chip supply problem. Apple reportedly expects strong demand for the new iPhone, but the company needs to ensure a supply of chips heading into next year.

After U.S. equity markets close Tuesday, Apple will announce its fiscal third-quarter financial results for the quarter ended in June. The world’s most valuable company won’t be alone. Alphabet and Microsoft will be announcing quarterly results at about the same time. Facebook’s announcement comes Wednesday and Amazon’s is due Thursday. Tesla reports its quarterly results after markets close on Monday.

In the December 2020 quarter, Apple reported sales of more than $111 billion, its first-ever quarter with six-figure billions in revenue. In the March quarter, Apple’s revenue totaled $89.58 billion. For the June quarter, Apple is expected to report revenue of $73.44 billion, a year-over-year increase of 23%, or nearly $14 billion. The third quarter typically sees Apple’s least revenue total, so the sequential decline is not unusual.

Apple is expected to report earnings per share of $1.01, down from $1.40 (28%) in the March quarter. Again, the June quarter is typically Apple’s annual low point.

While Apple’s share price has risen by about 12.5% so far in 2021, the good news for investors is that the company continues to make progress on its goal to be net cash neutral at some future date. That means total cash will be equal to total debt. At the end of the March quarter, Apple reported total cash of $205 billion and $122 billion in debt. To reach its goal of net cash neutrality, the $83 billion in “excess” cash eventually will be returned to shareholders in dividends and share buybacks. At its current annual payout of $0.88, Apple’s dividend yield is just 0.59%.

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