The SoC crunch: Apple has had fires and earthquakes too

An Office Hours question asked by Jeff S., July 31, 2026.

Q: On the SoC supply shortage: what are Apple's options? They could increase prices, which reduces demand — but what else can they do to capture this demand?

What they've said they're doing is to take some costs away from other components. A big target would have been the screen, then the battery — non-silicon parts, maybe the casing. Now, that's a tough thing to negotiate; these suppliers probably already are on very thin margins to begin with. But Apple may have other ways to negotiate: in terms of duration of contract, in terms of exclusivity, or other things that they can pull. I think they're trying to get as much as they can from everybody. They'll say: if you don't do this, units are going to go down, and if units go down, you make less money too. So there's probably something going on there in negotiating.

On the SoC, there's just an overall crunch across the board with semis, as we know. We're not privy to all that. But I think they've had tougher problems in the past. It's a 100-year flood, but they've had fires too. They've had earthquakes. As I always say, the biggest problem is the workforce that walks out the door every day at five. What if they don't come back? There are other issues that are existential, if I'm honest. But that's what management is about.

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Editor's Note: This was one of the questions asked by participants in Asymco's July 2026 Office Hours live Q&A session, held the day after Apple's FQ3 2026 earnings and open to Asymco One subscribers.

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