A day after an analyst spooked some Apple investors with a report that the company had cut back on its iPad production, several different analysts are saying that everything is fine. They also have their own theories as to why Apple may have lowered orders for some iPad 2 parts by as much as 25 percent: Apple either over-ordered, or is seeing quality problems with some parts from its third-party vendors.
On Monday, a JP Morgan analyst wrote that Apple had cut its order of some parts for the iPad 2 from Hon Hai Precision Industry in China and other vendors. This led some investors and pundits to wonder if demand had dropped for the iPad 2, or if the economy was to blame. Either way, Apple’s stock was punished and it dropped a little over 3 percent during trading Monday.
Then late Monday, a different JP Morgan analyst stepped in to say that Apple and its iPad production are “fine,” according to Bloomberg. Tuesday morning, UBS analyst Maynard Um weighed in, calling the concerns over Apple’s supply chain “overblown” and the changes in supply chain orders “very normal” in a research note to clients. Barclays Capital wrote that it “disagrees with any talk of a shipment slowdown” and the cuts reported Monday could just be related to components themselves, and not to shipments of the finished iPad 2 being cut.
Um of UBS wrote Tuesday, ”Our extensive checks among the global tech team suggest this is limited to components that could have yield and production issues.”
He also noted that “relying solely on supply chain data could be misleading, and supply chain cuts are not atypical whether due to surplus ordering, manufacturing share shifts, timing of new product/regional launches, etc. There are also inherent differences between component orders and device production.”
Um says UBS still expects Apple to produce between 12 million and 13 million iPads during the third and fourth quarters of this year.