Following the chatter this morning by analysts debating the outlook for Apple’s (AAPL) iPad, FBR Capital semiconductor analyst Craig Berger weighs in with his own thoughts based on his “checks” of the supply chain: he agrees with JP Morgan that there are production cuts for the iPad.?
Berger writes that Apple is acknowledging some global economic concern. After increasing orders previously to squeeze price concessions out of Hon Hai Precision and Apple’s component suppliers, Apple is now, he thinks, succumbing to distressing economic trends out of China and elsewhere, he speculates. (Data from the purchasing manager’s survey last week showed some softness in?China’s economic trends.)
Writes Berger:
Largely consistent with a competitor’s equity research report this morning regarding Hon Hai, our contacts saw an interim cut to both iPhone and iPad production estimates. In short, our contacts say that 3Q11 iPhone production estimates have decreased from 26.1M to 23.7M units (+13% QOQ), while 4Q11 estimates now reflect 32M units (+35% QOQ), better than our prior 30M unit estimate, and with some room for upside capacity if necessary. For the iPad, 3Q11 builds were revised down slightly from 16.8M to 16.0M units (+48% QOQ), and 4Q11 iPad builds were revised down by 24% from 17.2M to 13.0M units (-19% QOQ) as iPad 2 WiFi builds were cut by 2M units, and as the prior 1M units of the new ‘iPad 2 Plus’ were eliminated as continuing retina display manufacturing challenges push this product launch towards March 2012.
Mind you, Berger adds a caveat to all this: “Importantly, 4Q11 hasn��t even started yet so if demand/sell-through are good this iPad forecast can again move higher (and very well may move higher).”
Berger’s princip! al conce rn is not Apple but its suppliers, and in particular,?Broadcom (BRCM) and Qualcomm (QCOM). He says not to worry, as any slowdownl would be already reflected in their shares. He rates both stocks Outperform.?
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