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Apple to build 5 million iPads during first half of 2010 - report

Apple's orders to its Taiwanese manufacturing facilities call for the production of roughly 5 million iPads before the heart of summer rolls around, according to a new report which also praises the company for its iPhone, notebook and desktop secular growth trends.

Citing unnamed sources within the iPhone maker's supply chain, FBR Capital Markets analyst Craig Berger said in a report Tuesday that the company's initial iPad build ramp calls for 5 million units to be manufactured in the first half of 2010 alone, up slightly from earlier projections of 4 to 5 million units.

"We believe various news articles and competitor notes calling for a build delay were just false alarms and note Apple has already announced that Wi-Fi iPad models will be available in the U.S. on April 3 and models with Wi-Fi and 3G will be available in late April," he wrote. "While we do not yet have visibility into the specific chip suppliers, we think that many of the iPhone chip suppliers will also sell into the [iPad]."

Meanwhile, Berger said similar channel checks show Apple has recently increased orders for the production of iPods and Macs for the current calendar quarter while decreasing build orders for iPhones. More specifically, he said iPod orders have been hiked by 133%, notebook orders by 70%, desktop orders by 100%, while iPhone orders were cut by 20% "as Apple seeks to reduce channel inventory."

The analyst pointed out, however, that changes to build volumes and their sequential growth rates (as seen in the chart above) "are not highly correlated with Apple sales data in any one period due to inventory build ups and draw downs, the impacts of new product launches, and seasonal impacts." Instead, he follows the trends to determine whether the company is in need of more product (which would benefit its component suppliers), or less product (which would obviously have a negative impact on component suppliers).

Perhaps more telling are Berger's charts on Apple's four-quarter summation of production builds, which provides an alternative view on the growth of Apple's core hardware offerings by presenting a running sum of build orders for each product over the preceding twelve months, with the totals having been normalized for seasonality and inventory buildups and draw-downs.

Build Volumes

"What we see is that iPhone growth has been nothing short of spectacular, iPods seem to be a more mature product past its peak as iPhone and iPad sales cannibalize iPod sales, Notebook growth continues to be quite robust, and Desktop growth continues, but at a much more modest pace," he explained.

Overall, Berger concluded that his latest round of checks are likely to prove positive for Apple's Mac chip suppliers (like Intel, Marvell, and Nvidia), while being slightly negative for its iPhone chip suppliers (like Broadcom). The analyst carries no rating on Apple but ranks Broadcom at Outperform and both Intel and Nvidia at Market Perform.



29 Comments

woohoo! 15 Years · 271 comments

10 million iPads a year.

It's a start of a whole new platform.

I just wish Steve will allow the App Store apps to run on a Mac (dual compile, dual UI versions), there is no need to keep them isolated to iPods, iPads and iPhones now that they are going to have larger versions for the larger screen iPad.

People who only need the limited 1Ghz performance of a iPad will get that, those who need more will get a Mac. It's nice to be able to have the same app run on most all Apple devices anyway.

Apple lowered the price to develop for the Mac, same as a SDK for the iPad, so there is no excuse anymore.

Time to tie them all together.

sflocal 17 Years · 6150 comments

five million units to start. Sounds like they're going to be serious sellers!

ireland 19 Years · 17437 comments

Makes sense, it's a "cool looking", "new" category that is yet to be proven.

shrike 16 Years · 487 comments

You guys know what they say about analysts opinions. This one appears to be on the high side of the prediction curve, like the analysts predicting 11 million iPhones in Q4 2009. Channel checks are interesting data. Unfortunately, Apple can easily change their orders. They do this a lot to freeze their suppliers and component competitors too.

anantksundaram 19 Years · 20391 comments

Quote:
Originally Posted by Shrike

You guys know what they say about analysts opinions. This one appears to be on the high side of the prediction curve, like the analysts predicting 11 million iPhones in Q4 2009. Channel checks are interesting data. Unfortunately, Apple can easily change their orders. They do this a lot to freeze their suppliers and component competitors too.

Exactly.

These predictions are worth the paper that this AI report is written on.