Apple shares dropped sharply in after-hours trading as component shortages weighed on sales forecasts, indicating that industry-wide supply chain constraints are having a more severe impact than anticipated. During its earnings call on Thursday, Apple projected revenue growth of 9% to 11% for the fiscal fourth quarter ending in September, falling short of analyst expectations for over 12% growth.

The company has been grappling with shortages of memory chips and computer processors, which forced it to raise prices on Mac and iPad models in June. Supply tightness has extended delivery times for key computer products like the Mac mini and Mac Studio. Chief Financial Officer Kevan Parekh stated on the call that supply restrictions would affect iPhone, Mac, and iPad businesses in the September quarter, with currency fluctuations also dragging on growth.

Earnings revealed that Apple's services business and Greater China sales both grew more slowly than analyst projections in the past quarter, fueling investor concerns about these two critical markets. While total revenue surpassed analyst estimates, Apple's Greater China sales in the fiscal third quarter reached $18.8 billion, notably below the $19.6 billion expected. Services revenue came in at $30.7 billion, also missing the $31.4 billion forecast.

In a way, the past quarter served as a farewell for Chief Executive Officer Tim Cook, who will hand over management to hardware chief John Ternus on September 1. Since taking the helm at Apple in 2011, Cook has diversified the product lineup and pushed annual sales to nearly $500 billion.

The iPhone, Apple's largest revenue source, was a highlight in Thursday's results. Product revenue grew 22% to $54.3 billion in the quarter, exceeding the $53.6 billion market estimate. The data suggests robust demand for the iPhone 17 series launched last September. The company also introduced a new, lower-priced model, the iPhone 17e, in March.

Services revenue, which includes Apple Music, the App Store, iCloud subscriptions, streaming video, and other digital services, grew 12% in the past quarter, a disappointing performance. For the quarter ending June 27, Apple's earnings per share rose to $2.02, above the average analyst estimate of $1.89.

Mac business revenue was approximately $10.4 billion, up 29% year-over-year and significantly higher than the $8.62 billion market forecast. In March, Apple launched several new Mac models, including the MacBook Neo, the MacBook Pro with the M5 chip, and a new MacBook Air.

iPad business revenue reached $6.19 billion, below the analyst expectation of $6.89 billion. Apple released a new iPad Air in March and updated the iPad Pro last October, but both products mainly featured chip upgrades rather than major design changes. The company plans to boost sales by launching multiple new Mac and iPad models between late this year and next spring, including its first touchscreen MacBook and a new iPad mini.