Apple iPad Supply Chain "Nearly Halted"

Tyler Durden's picture

It seems that when it comes to looking at fundamentals, chartists such as DeMark and the other bottom-calling knife-catching 'value-players' who claim to have read the Apple tea-leaves are good at looking at, well, charts, and rather horrible at divining the underlying cash flow supporting a stock. Or lack thereof as is rapidly becoming the case of Apple. As Reuters notes, it appears Sharp (the manufacturer of iPad screens) has nearly halted production of the 9.7-inch screens - as demand shifts to the iPad mini. This semi-confirmation of Citi's supply chain checks from last month suggests that concerns over growth in iPad may well have been justified and the expectedly lower margin iPad mini will benefit - as Macquarie Research has estimated that iPad shipments will tumble nearly 40 percent in the current quarter to about 8 million from about 13 million in the fourth quarter, although Apple's total tablet shipments will show a much smaller decrease due to strong iPad mini sales. It is quite apparent, as the WSJ notes, that the shift in the coolness factor has taken place as Samsung's new smartphone is gathering more 'hype' as iPhone is now "the underdog" in innovation.

AAPL is trading at $497 in the pre-market

 

Via Reuters:

Sharp's iPad screen production line at its Kameyama plant in central Japan has fallen to the minimal level to keep the line running this month after a gradual slowdown began at the end of 2012 as Apple manages its inventory, the industry sources with knowledge of Sharp's production plans told Reuters.

 

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The sources didn't say how much of the slowdown was due to seasonal changes in demand or consumers opting for the smaller iPad mini and were unable to characterize Apple's overall tablet sales.

 

Macquarie Research has estimated that iPad shipments will tumble nearly 40 percent in the current quarter to about 8 million from about 13 million in the fourth quarter, although Apple's total tablet shipments will show a much smaller decrease due to strong iPad mini sales.

 

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Any indication that iPad sales are struggling could add to concern that the appeal of Apple products is waning after earlier media reports said it is slashing orders for iPhone 5 screens and other components from its Asian suppliers.

 

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Apple, the reports said, has asked state-managed Japan Display, Sharp and LG Display to halve supplies of iPhone panels from an initial plan for about 65 million screens in January-March.

 

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BNP Paribas expects the iPad mini will eat into sales of the full-sized iPad, with the mini rise to 60 percent of total iPad shipments in the January-March quarter.