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0000320193
20211029
10-K
141
Potential effects include financial instability; inability to obtain credit to finance operations and purchases of the Company’s products; and insolvency.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
142
A downturn in the economic environment can also lead to increased credit and collectibility risk on the Company’s trade receivables; the failure of derivative counterparties and other financial institutions; limitations on the Company’s ability to issue new debt; reduced liquidity; and declines in the fair value of the...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
143
These and other economic factors can materially adversely affect the Company’s business, results of operations and financial condition.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
144
The Company’s business can be impacted by political events, trade and other international disputes, war, terrorism, natural disasters, public health issues, industrial accidents and other business interruptions.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
145
Political events, trade and other international disputes, war, terrorism, natural disasters, public health issues, industrial accidents and other business interruptions can harm or disrupt international commerce and the global economy, and could have a material adverse effect on the Company and its customers, suppliers...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
146
The Company has a large, global business, and the Company believes that it generally benefits from growth in international trade.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
147
Trade and other international disputes can result in tariffs, sanctions, and other measures that restrict international trade and can adversely affect the Company’s business.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
148
For example, tensions between the U.S. and China have led to a series of tariffs being imposed by the U.S. on imports from China mainland, as well as other business restrictions.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
149
Tariffs increase the cost of the Company’s products and the components and raw materials that go into making them.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
150
These increased costs adversely impact the gross margin that the Company earns on its products.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
151
Tariffs can also make the Company’s products more expensive for customers, which could make the Company’s products less competitive and reduce consumer demand.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
152
Countries may also adopt other measures, such as controls on imports or exports of goods, technology or data, that could adversely impact the Company’s operations and supply chain and limit the Company’s ability to offer its products and services as designed.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
153
These measures can require the Company to take various actions, including changing suppliers, restructuring business relationships, and ceasing to offer third-party applications on its platforms.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
154
Changing the Company’s operations in accordance with new or changed trade restrictions can be expensive, time-consuming, disruptive to the Company’s operations and distracting to management.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
155
Such restrictions can be announced with little or no advance notice and the Company may not be able to effectively mitigate all adverse impacts from such measures.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
156
Political uncertainty surrounding trade and other international disputes could also have a negative effect on consumer confidence and spending, which could adversely affect the Company’s business.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
157
Many of the Company’s operations and facilities, as well as critical business operations of the Company’s suppliers and contract manufacturers, are in locations that are prone to earthquakes and other natural disasters.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
158
In addition, such operations and facilities are subject to the risk of interruption by fire, power shortages, nuclear power plant accidents and other industrial accidents, terrorist attacks and other hostile acts, ransomware and other cybersecurity attacks, labor disputes, public health issues, including pandemics such...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
159
Global climate change is resulting in certain types of natural disasters occurring more frequently or with more intense effects.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
160
Such events can make it difficult or impossible for the Company to manufacture and deliver products to its customers, create delays and inefficiencies in the Company’s supply and manufacturing chain, and result in slowdowns and outages to the Company’s service offerings.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
161
Following an interruption to its business, the Company can require substantial recovery time, experience significant expenditures to resume operations, and lose significant sales.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
162
Because the Company relies on single or limited sources for the supply and manufacture of many critical components, a business interruption affecting such sources would exacerbate any negative consequences to the Company.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
163
The Company’s operations are also subject to the risks of industrial accidents at its suppliers and contract manufacturers.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
164
While the Company’s suppliers are required to maintain safe working environments and operations, an industrial accident could occur and could result in disruption to the Company’s business and harm to the Company’s reputation.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
165
Major public health issues, including pandemics such as the COVID-19 pandemic, have adversely affected, and could in the future adversely affect, the Company due to their impact on the global economy and demand for consumer products; the imposition of protective public safety measures, such as stringent employee travel...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
166
While the Company maintains insurance coverage for certain types of losses, such insurance coverage may be insufficient to cover all losses that may arise.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
167
Apple Inc. | 2021 Form 10-K | 7 Global markets for the Company’s products and services are highly competitive and subject to rapid technological change, and the Company may be unable to compete effectively in these markets.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
168
The Company’s products and services are offered in highly competitive global markets characterized by aggressive price competition and resulting downward pressure on gross margins, frequent introduction of new products and services, short product life cycles, evolving industry standards, continual improvement in produc...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
169
The Company’s ability to compete successfully depends heavily on ensuring the continuing and timely introduction of innovative new products, services and technologies to the marketplace.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
170
The Company designs and develops nearly the entire solution for its products, including the hardware, operating system, numerous software applications and related services.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
171
As a result, the Company must make significant investments in R&D.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
172
There can be no assurance these investments will achieve expected returns, and the Company may not be able to develop and market new products and services successfully.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
173
The Company currently holds a significant number of patents, trademarks and copyrights and has registered, and applied to register, additional patents, trademarks and copyrights.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
174
In contrast, many of the Company’s competitors seek to compete primarily through aggressive pricing and very low cost structures, and by imitating the Company’s products and infringing on its intellectual property.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
175
Effective intellectual property protection is not consistently available in every country in which the Company operates.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
176
If the Company is unable to continue to develop and sell innovative new products with attractive margins or if competitors infringe on the Company’s intellectual property, the Company’s ability to maintain a competitive advantage could be adversely affected.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
177
The Company has a minority market share in the global smartphone, personal computer and tablet markets.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
178
The Company faces substantial competition in these markets from companies that have significant technical, marketing, distribution and other resources, as well as established hardware, software and digital content supplier relationships.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
179
In addition, some of the Company’s competitors have broader product lines, lower-priced products and a larger installed base of active devices.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
180
Competition has been particularly intense as competitors have aggressively cut prices and lowered product margins.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
181
Certain competitors have the resources, experience or cost structures to provide products at little or no profit or even at a loss.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
182
Some of the markets in which the Company competes have from time to time experienced little to no growth or contracted overall.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
183
Additionally, the Company faces significant competition as competitors imitate the Company’s product features and applications within their products or collaborate to offer solutions that are more competitive than those they currently offer.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
184
The Company also expects competition to intensify as competitors imitate the Company’s approach to providing components seamlessly within their offerings or work collaboratively to offer integrated solutions.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
185
The Company’s services also face substantial competition, including from companies that have significant resources and experience and have established service offerings with large customer bases.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
186
The Company competes with business models that provide content to users for free.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
187
The Company also competes with illegitimate means to obtain third-party digital content and applications.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
188
The Company’s business, results of operations and financial condition depend substantially on the Company’s ability to continually improve its products and services to maintain their functional and design advantages.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
189
There can be no assurance the Company will be able to continue to provide products and services that compete effectively.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
190
Business Risks To remain competitive and stimulate customer demand, the Company must successfully manage frequent introductions and transitions of products and services.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
191
Due to the highly volatile and competitive nature of the industries in which the Company competes, the Company must continually introduce new products, services and technologies, enhance existing products and services, effectively stimulate customer demand for new and upgraded products and services, and successfully ma...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
192
The success of new product and service introductions depends on a number of factors, including timely and successful development, market acceptance, the Company’s ability to manage the risks associated with production ramp-up issues, the availability of application software for the Company’s products, the effective man...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
193
There can be no assurance the Company will successfully manage future introductions and transitions of products and services.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
194
Apple Inc. | 2021 Form 10-K | 8 The Company depends on component and product manufacturing and logistical services provided by outsourcing partners, many of which are located outside of the U.S.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
195
Substantially all of the Company’s manufacturing is performed in whole or in part by outsourcing partners located primarily in Asia.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
196
A significant concentration of this manufacturing is currently performed by a small number of outsourcing partners, often in single locations.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
197
The Company has also outsourced much of its transportation and logistics management.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
198
While these arrangements can lower operating costs, they also reduce the Company’s direct control over production and distribution.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
199
Such diminished control has from time to time and may in the future have an adverse effect on the quality or quantity of products manufactured or services provided, or adversely affect the Company’s flexibility to respond to changing conditions.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
200
Although arrangements with these partners may contain provisions for product defect expense reimbursement, the Company generally remains responsible to the consumer for warranty and out-of-warranty service in the event of product defects and experiences an unanticipated product defect liability from time to time.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
201
While the Company relies on its partners to adhere to its supplier code of conduct, violations of the supplier code of conduct occur from time to time and can materially adversely affect the Company’s business, reputation, results of operations and financial condition.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
202
The Company relies on single-source outsourcing partners in the U.S., Asia and Europe to supply and manufacture many components, and on outsourcing partners primarily located in Asia, for final assembly of substantially all of the Company’s hardware products.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
203
Any failure of these partners to perform can have a negative impact on the Company’s cost or supply of components or finished goods.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
204
In addition, manufacturing or logistics in these locations or transit to final destinations can be disrupted for a variety of reasons, including natural and man-made disasters, information technology system failures, commercial disputes, military actions, economic, business, labor, environmental, public health or polit...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
205
The Company has invested in manufacturing process equipment, much of which is held at certain of its outsourcing partners, and has made prepayments to certain of its suppliers associated with long-term supply agreements.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
206
While these arrangements help ensure the supply of components and finished goods, if these outsourcing partners or suppliers experience severe financial problems or other disruptions in their business, such continued supply can be reduced or terminated, and the recoverability of manufacturing process equipment or prepa...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
207
Future operating results depend upon the Company’s ability to obtain components in sufficient quantities on commercially reasonable terms.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
208
Because the Company currently obtains certain components from single or limited sources, the Company is subject to significant supply and pricing risks.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
209
Many components, including those that are available from multiple sources, are at times subject to industry-wide shortages and significant commodity pricing fluctuations that can materially adversely affect the Company’s business, results of operations and financial condition.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
210
For example, the global semiconductor industry is experiencing high demand and shortages of supply, which has adversely affected, and could materially adversely affect, the Company’s ability to obtain sufficient quantities of components and products on commercially reasonable terms or at all.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
211
While the Company has entered into agreements for the supply of many components, there can be no assurance the Company will be able to extend or renew these agreements on similar terms, or at all.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
212
Component suppliers may suffer from poor financial conditions, which can lead to business failure for the supplier or consolidation within a particular industry, further limiting the Company’s ability to obtain sufficient quantities of components on commercially reasonable terms or at all.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
213
The effects of global or regional economic conditions on the Company’s suppliers, described in “The Company’s operations and performance depend significantly on global and regional economic conditions and adverse economic conditions can materially adversely affect the Company’s business, results of operations and finan...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
214
Therefore, the Company remains subject to significant risks of supply shortages and price increases that can materially adversely affect its business, results of operations and financial condition.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
215
The Company’s new products often utilize custom components available from only one source.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
216
When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or their manufacturing capacities have increased.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
217
The continued availability of these components at acceptable prices, or at all, can be affected for any number of reasons, including if suppliers decide to concentrate on the production of common components instead of components customized to meet the Company’s requirements.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
218
When the Company’s supply of components for a new or existing product has been delayed or constrained, or when an outsourcing partner has delayed shipments of completed products to the Company, the Company’s business, results of operations and financial condition have been adversely affected and future delays or constr...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
219
The Company’s business and financial performance could also be materially adversely affected depending on the time required to obtain sufficient quantities from the source, or to identify and obtain sufficient quantities from an alternative source.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
220
Apple Inc. | 2021 Form 10-K | 9 The Company’s products and services may be affected from time to time by design and manufacturing defects that could materially adversely affect the Company’s business and result in harm to the Company’s reputation.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
221
The Company offers complex hardware and software products and services that can be affected by design and manufacturing defects.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
222
Sophisticated operating system software and applications, such as those offered by the Company, often have issues that can unexpectedly interfere with the intended operation of hardware or software products.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
223
Defects can also exist in components and products the Company purchases from third parties.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
224
Component defects could make the Company’s products unsafe and create a risk of environmental or property damage and personal injury.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
225
These risks may increase as the Company’s products are introduced into specialized applications, including healthcare.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
226
In addition, the Company’s service offerings can have quality issues and from time to time experience outages, service slowdowns or errors.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
227
As a result, the Company’s services from time to time have not performed as anticipated and may not meet customer expectations.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
228
There can be no assurance the Company will be able to detect and fix all issues and defects in the hardware, software and services it offers.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
229
Failure to do so can result in widespread technical and performance issues affecting the Company’s products and services.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
230
In addition, the Company can be exposed to product liability claims, recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment, and/or intangible assets, and significant warranty and other expenses, including litigation costs and regulatory fines.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
231
Quality problems can also adversely affect the experience for users of the Company’s products and services, and result in harm to the Company’s reputation, loss of competitive advantage, poor market acceptance, reduced demand for products and services, delay in new product and service introductions and lost sales.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
232
The Company is exposed to the risk of write-downs on the value of its inventory and other assets, in addition to purchase commitment cancellation risk.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
233
The Company records a write-down for product and component inventories that have become obsolete or exceed anticipated demand, or for which cost exceeds net realizable value.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
234
The Company also accrues necessary cancellation fee reserves for orders of excess products and components.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
235
The Company reviews long-lived assets, including capital assets held at its suppliers’ facilities and inventory prepayments, for impairment whenever events or circumstances indicate the assets may not be recoverable.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
236
If the Company determines that an impairment has occurred, it records a write-down equal to the amount by which the carrying value of the asset exceeds its fair value.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
237
Although the Company believes its inventory, capital assets, inventory prepayments and other assets and purchase commitments are currently recoverable, there can be no assurance the Company will not incur write-downs, fees, impairments and other charges given the rapid and unpredictable pace of product obsolescence in ...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
238
The Company orders components for its products and builds inventory in advance of product announcements and shipments.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
239
Manufacturing purchase obligations cover the Company’s forecasted component and manufacturing requirements, typically for periods up to 150 days.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
240
Because the Company’s markets are volatile, competitive and subject to rapid technology and price changes, there is a risk the Company will forecast incorrectly and order or produce excess or insufficient amounts of components or products, or not fully utilize firm purchase commitments.
0000320193-21-000105/full-submission.txt