updated 10:10 am EDT, Fri September 26, 2008
iPhone production slashed?
Apple has slashed the number of iPhones it plans to build before the end of the year, claims the analyst group Pacific Crest. While it had been expected that some 18 million phones would be made, Crest cites "supply chain channel checks" which indicate that Apple is ordering only 14 to 15 million units. If accurate, the move is not expected to hurt Apple, but rather its suppliers.
Among these are Skyworks Solutions and Triquint Semiconductor, which produce power amplifiers, and other companies such as Linear Technology, On Semiconductor and National Semiconductor. Indirectly affected may be memory makers SanDisk and Micron; while Apple normally consumes large quantities of NAND memory, there is already an oversupply at present, which is not expected to lift any time soon.
Crest also observes that the 8GB iPhone appears to be the most popular, something reflected in decreased inventory at AT&T stores throughout August and September. This may signal a trend towards people buying cheaper smartphones, and as companies like Research in Motion attempt to compete, it could affect margins across the industry, as well as the profits of more suppliers.
The drain on 8GB phones could represent an intentional strategy on Apple's part, however, if the company intends to switch to 16 and 32GB capacities in the near future. Crest argues that this could generate yet more margin issues in the industry, forcing prices to stay low across the board.