UPDATE [Monday, September 26, 2011 at 5:27pm ET]: Note that J.P. Morgan appears to be backpedalling on the original report filed by their Asia team. Per Business Insider, “J.P. Morgan’s U.S. Apple analyst said ‘Apple is fine’, and the U.S. team does not agree with the Asian analyst team which made the report that Apple was cutting back its iPad orders”.
Apple has reportedly cut orders of iPad components for the holiday quarter by 25 percent, JPMorgan Chase & Co. wrote in a report. The move could mean a drop from the seventeen million iPads manufactured in the third quarter to thirteen million units ahead of the all important holiday shopping season. According to Bloomberg:
Several supply-chain vendors indicated in the past two weeks that Apple, the world’s biggest company by market value, lowered fourth-quarter iPad orders 25 percent, the first such cut that analysts at J.P. Morgan’s electronic manufacturing services team in Hong Kong said they have ever seen. The report did not list the affected companies.
J.P. Morgan analyst Mark Moskowitz maintains that Apple will ship between 10.9 million to twelve million iPads in the third and fourth quarters. If you remember, a similar thing happened early this year when Apple reduced orders of iPad 1 ahead of the iPad 2 introduction.
It is nevertheless too early to tell whether this rumored change signals Apple winding down iPad 2 manufacturing ahead of iPad 3. The most likely explanation is that Foxconn is reducing its iPad output in China as the Brazil plant goes online. The Brazilian Minister of Science and Technology, Aloizio Mercadante promised iPads made in Brazil by December.
Per latest supply chain checks, thinner and lighter batteries (presumably for iPad 3) are slated to enter mass production in the first quarter one of next year. TSMC, which allegedly won Apple’s chip business from Samsung, will be at full capacity during iPad 3 build times.
However, with an Amazon tablet allegedly slated for introduction Wednesday, Apple may have tweaked its iPad 3 launch plans. It is also entirely possible that Apple modeled for a too optimistic fourth quarter demand and is now simply re-aligning production plans to reduce inventory (Apple CEO Tim Cook thinks inventory is “fundamentally evil”).
Apple shipped 9.25 million iPads during the June quarter following the 4.69 million iPads shipped in the March quarter, a lower-than-expected figure blamed on the product transition amid iPad 2 launch and Apple winding down manufacturing of the original model. Channel inventory was about 850,000 units in the March quarter and 1.05 million units in the June quarter, a 200,000 units increase.
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