Apple Flags Supply Crunch Despite Record Quarter, Sending Shares Lower

Apple has warned that intensifying supply constraints will disrupt deliveries of its flagship products in the coming months, dampening investor enthusiasm after the technology giant posted one of its strongest quarterly performances in recent years.

The iPhone maker reported revenue of US$109 billion for the quarter ended June, a 16% year-on-year increase, while net profit climbed 26% to US$29 billion, supported by unexpectedly strong demand for iPhones and Mac computers.

However, the upbeat results were overshadowed by management’s warning that shortages of advanced semiconductor components would increasingly constrain production. The caution sent Apple shares down more than 7% in after-hours trading, reflecting concerns that supply limitations could curb future revenue growth despite robust consumer demand.

Outgoing Chief Executive Tim Cook said supply pressures, already affecting Mac production, are expected to spread to iPhone and iPad models during the current quarter.

“We’re seeing some very significant constraints currently with limited flexibility in the supply chain to remedy it,” Cook told analysts, adding that the challenge stemmed primarily from demand exceeding the company’s production forecasts rather than structural weaknesses in the supply chain.

Apple’s dependence on advanced chips manufactured by Taiwan Semiconductor Manufacturing Co. (TSMC) has left the company exposed as demand for next-generation processors continues to outstrip available capacity across the global semiconductor industry.

The warning comes despite exceptional product momentum. iPhone sales rose 22%, while Mac revenue increased 25%, with Cook describing the latest iPhone launch as the most successful in the company’s history.

Apple also disclosed that tariff refunds lifted its gross margin by approximately two percentage points during the quarter, implying a benefit of roughly US$1.1 billion. The company said the funds would be redirected towards expanding domestic manufacturing as part of its previously announced US$600 billion US investment programme over the next four years.

The earnings also highlighted Apple’s intensifying push into artificial intelligence. Cook reaffirmed that the redesigned AI-powered Siri assistant remains on track for a broader public rollout following beta testing, describing on-device AI processing as a strategic competitive advantage as Apple seeks to strengthen its position against rivals including OpenAI, Google and Anthropic.

While the company’s financial performance underscored resilient consumer demand and pricing power, investors are now focused on whether Apple can secure sufficient chip supplies to sustain growth through the remainder of the year, making production capacity—not demand—the principal constraint on the world’s most valuable technology company.