The iPhone 5 Supply Chain Conundrum: What’s Behind the Shortage?
Apple’s highly anticipated iPhone 5 release was met with unprecedented demand, but it seems that the company’s supply chain may not have been equipped to meet this level of interest. According to various analysts and reports, the main reason for this shortage is related to the use of thinner touchscreens in the new device.
A Thinner Touchscreen: The Culprit Behind the Shortage
In contrast to previous iPhone generations, the iPhone 5 features a thinner touchscreen that combines touch sensor and glass into one unit. This innovative design has been touted as a major improvement over its predecessors, but it seems that this change may have contributed to the current supply chain issues.
The Role of Suppliers in the iPhone 5 Production
Two primary suppliers, LG Display and Japan Display, are currently providing the in-cell displays for the iPhone 5. However, some analysts believe that adding another supplier, Sharp, could alleviate some of the pressure on Apple’s production numbers. But it seems that Sharp is having trouble getting its production quality up to par, as it struggles to reduce defects in new screens.
Barclays Analyst Ben Reitzes Weighs In
Ben Reitzes, a Barclays analyst, noted in a research report (via Bloomberg) that adding Sharp to the list of suppliers could help ease the supply issue. However, he also highlighted the difficulties faced by Sharp in achieving production quality:
"Sharp is having trouble getting its production quality up to par, and we believe it will take some time for them to get back on track."
IHS Senior Analyst Tom Dinges Shares His Insights
Tom Dinges, a senior analyst at IHS, agreed that supply constraints could be contributing to the shortage. However, he also pointed out that this is a "good problem to have":
"Supply constraints are always a concern for companies like Apple, but it’s a good problem to have. It means that there’s high demand for their products."
Estimating iPhone 5 Sales: Barclays’ Projections
Barclays has estimated that Apple will sell around 45.2 million iPhones in the December quarter and 170.7 million units over the first year of production. While these numbers may seem impressive, they also suggest that there could be some pent-up demand for the device.
The Long-Term Impact of Supply Constraints on Apple’s Finances
Interestingly, analyst Rob Chira noted before the iPhone 5 release that Apple’s stock has actually performed better in quarters where supply constraints have been reported. This could indicate that investors are willing to overlook short-term production issues if they believe it will lead to long-term financial benefits.
CEO Tim Cook’s Statement on Supply Constraints
In a recent press release, Apple CEO Tim Cook acknowledged the challenges faced by the company in meeting demand:
"We’re working hard to meet demand but we’re facing some challenges. We appreciate your patience and understanding."
Qualcomm’s 28-Nanometer Baseband Chip: Another Potential Weakness?
Rob Chira also identified Qualcomm’s 28-nanometer baseband chip as another potential area of concern for supply volume. This suggests that Apple may be relying on a single supplier for this critical component.
Aftermarket Trading and Stock Performance
Following the news of supply constraints, Apple’s stock dipped to around $687 in aftermarket trading. However, analysts believe that this could be a temporary blip and that the company’s stock will recover once investors come to terms with the current production issues.
Update: Apple Responds to Questions on iPhone 5 Supply Constraints
When approached for comment on the supply chain issues, Apple had no additional information to provide beyond its official press release. This suggests that the company is committed to meeting demand but acknowledges the challenges it faces in doing so.
In conclusion, the current shortage of iPhone 5 devices may be attributed to various factors, including the use of thinner touchscreens and supply chain constraints. While this may be a short-term issue for Apple, analysts believe that the long-term benefits of investing in new technology will outweigh any immediate production challenges.
