Big Tech Companies Apple and Amazon Warn of Worsening Supply Chain Crisis

On Thursday, two of the biggest tech companies in the world posted earnings that fell below market expectations, attributed to the ongoing supply chain crisis that is paralyzing the American economy, according to CNN.

For the third quarter of 2021, Amazon’s net sales amounted to around $110.8 billion, which was a 15 percent increase from the previous year; however, this ultimately fell below market analyst predictions of about $111.6 billion. Amazon’s overall net income for the same period decreased from the same period in 2020 to about $3.2 billion, when predictions estimated around $4.6 billion.

Apple’s sales during the same quarter were $83.4 billion, with iPhone sales at $38.9 billion; both were lower than original projections.

In response to the subpar numbers, Amazon CEO Andy Jassy suggested that the company could face even more lost revenue due to additional costs of spending in the fourth quarter. Jassy said that these costs would be due to the company experiencing “labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs” as a result of the supply chain breakdown, “all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season.”

Following the posting of Apple’s numbers, CEO Tim Cook said on a conference call that although “demand was very robust, “larger-than-expected supply constraints,” as well as a”manufacturing disruption,” ultimately contributed to the company’s $6 billion negative impact for the third quarter.

As a result, both companies’ stocks took a massive hit on Wall Street, with Amazon’s falling by 5 percent while Apple’s declined by 4 percent.

The ongoing supply chain crisis has been attributed to multiple factors, with an unprecedented shortage in the labor market being caused by, among other things, the extension of federal unemployment benefits incentivizing workers to stay out of the workforce, as well as nationwide vaccine mandates driving many employees out of their jobs. With the subsequent reduction in workers to deliver goods, shipments have been backed up in major ports such as the Port of Los Angeles, with nearly a hundred cargo ships waiting off the coast of California to offload their goods. At the same time, those very same supply chain fears have caused demand to spike, which has subsequently led to a rise in prices ahead of the holiday season.

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About Eric Lendrum

Eric Lendrum graduated from the University of California, Santa Barbara, where he was the Secretary of the College Republicans and the founding chairman of the school’s Young Americans for Freedom chapter. He has interned for Young America’s Foundation, the Heritage Foundation, and the White House, and has worked for numerous campaigns including the 2018 re-election of Congressman Devin Nunes (CA-22). He is currently a co-host of The Right Take podcast.

Photo: Long Beach, CA - October 06: Container cargo ships sit off shore from the Long Beach/Los Angeles port complex in Long Beach, CA, on Wednesday, October 6, 2021. (Photo by Jeff Gritchen/MediaNews Group/Orange County Register via Getty Images)