Analyst: Apple’s Supply Problems Are Real

Topeka Capital analyst Brian White, who this week is making visits to companies that are part of Apple’s (NASDAQ:AAPL) supply chain, has said in a new note to investors that there are signs of overall sluggish trends in product yields that are likely to persist for the next few months. As a result, White has predicted December quarter unit sales estimates for the iPhone to be between 32 million and 40 million units, instead of the 40 million to 50 million that some predicted ahead of the iPhone 5’s debut.

“Our meeting with a component vendor pointed to a sluggish demand environment through the end of the year,” White wrote. “The one bright spot was the ramp of new Apple products such as the iPhone 5 and the iPad Mini; however, the supply chain continues to struggle with yields and this is especially true for the iPhone 5.”

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White said that since the iPhone 5 had only reached 31 countries of the 100 Apple is targeting by the year’s end, older versions of the phone were still selling strongly. “According to iFeng, two of the four top selling smartphones during the Golden Week holiday in China were the iPhone 4S (#1) and the iPhone 4 (#2),” White wrote.

The analyst added that he expected the iPhone 5 to arrive in China just before the end of the year. “We expect Apple’s iPhone 5 to launch in China this December with its two existing carriers,” White wrote. “Already, certain China Unicom (NYSE:CHU) stores have sold out of the iPhone 4S to avoid an inventory situation ahead of the iPhone 5 launch. Hong Kong already has ‘iPhone 5 fever’ and the stores we visited were sold out … Also, carriers such as SmarTone are taking orders for the iPhone 5 with delivery within two to three weeks. Clearly, iPhone 5 supply remains an issue around the world.”

Earlier in the week, White had written in a note that the iPad Mini was not exactly turning out to be a “walk in the park for suppliers” in terms of manufacturing challengers. “The new iPad Mini is more challenging to produce than prior iPad iterations and we believe supply will initially be constrained. That said we remain comfortable with our five million to seven million iPad Mini unit forecast for the December quarter,” the analyst said.

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