Mike Peterson
The supply chain situation surrounding Apple's iPhone 13 production is improving, but there are still potential risks ahead for the lineup in the fourth quarter of 2021, JP Morgan says.
In a note to investors seen by AppleInsider, JP Morgan analyst Samik Chatterjee says that the iPhone 13 focus has recently shifted to supply constraints because of the increasing likelihood of Covid-19 resurgence and recent challenges to production in China driven by power usage restrictions.
Chatterjee notes that the supply ramp up on the new iPhone lineup has been slower than usual — even beyond the slightly delayed production start because of camera module issues.
The analyst says that the production equated to around two to three weeks, and though the start of production didn't "change materially," it implied that Apple had limited inventory heading into the iPhone 13 launch.
Camera module production continues to be the primary bottleneck for the iPhone 13 manufacturing, Chatterjee added. More specifically, issues around the sensor-shift optical image stabilization are seeing problems with supplier ramp. Covid-19 cases and lockdown restrictions also snarled production in Vietnam.
"With the easing of lockdown restrictions on Oct 1, and the flexibility to also leverage LG Innotek's camera facility in Vietnam, or a secondary facility in South Korea, we estimate production will ramp steadily from hereon," Chatterjee writes.
On the Chinese power regulations, Chatterjee says that the effect has been limited on large components and assembly. However, he does note that smaller component manufacturing could see an impact. The broader supply chain could also be affected by prolonged power shortages.
The potential headwinds to Apple's iPhone build plans could be as high as five to 10 million units out of the 143 million units modeled for the second half of 2021. It could drive muted revenue seasonality for the fourth quarter of 2021 and the first quarter of 2022, Chatterjee notes. While Apple is well-positioned for strong sales, the analyst believes the supply risks are noteworthy enough to continue monitoring.
Chatterjee maintains his Apple price target of $180, based on a price-to-earnings multiple of 28x on JP Morgan's 2023 earnings estimate of $6.55.
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Yesterday I tried to buy a 9th-gen. 256gb iPad, and was surprised discover that they’re pretty scarce—Apple and Best Buy have none across many locations, but I was able to get one (Space Gray only) from B&H. It’s slightly easier to find a 64gb model, but they aren’t plentiful either. Hard to tell if this is a good sign (sales are strong) or a bad one (supplies are low). I’m leaning towards the latter, but it could also just be a bit of both.
Cant get a 13 max pro, says not available to mid November. Sucks
A 5 week lead on the premium model this close to launch has historically been a signal of high demand. Considering all reports are that the 13 Pro Max is experiencing significant demand I’d have to suspect that supply issues are being somewhat overblown. Apple doesn’t fill warehouses with these pricy gems haven’t for some years now. Introduce with enough to satisfy early adopters and gauge demand while adjusting production. October 28 is soon enough and while we know Apple will be somewhat opaque in their comments they at least will be factual. Instead of the conjuring the media uses to gain clicks meaning revenue off of Apple’s well founded secrecy. Ordered a pro on the first day for my beloved and got her 12 promax. She is the photographer between us. She was never pleased with the size and this year she gets a camera upgrade while gaining a more comfortable size. Our 3 adult daughters who can both afford and utilize their 11 Pro camera’s constantly see few reasons to upgrade. The quality of the devices has become so significant that most everyone loves their iPhone until it breaks. For my wife what she gets is a new improved camera because she will utilize it and along with the camera comes a handy phone that has an astonishing computer that fits in her hand. The iPhone SE is still significantly sufficient kit for most needs. Fortunately for Apple and us shareholders they have created a substantial lust factor around the iPhone and more. My 2015 15” MacBook Pro serves my computing needs yet I’m already lusting over an as yet unnanounced M1x
$6.53 EPS estimate for FY23? Try $8.00
WS estimates are way to low