Here’s How Apple Rumors Are Born

Apple Tim Cook iPhone 5

DigiTimes, a Taiwan-based media outlet and market research company, is well-known to many industry watchers as a frequent source of Apple (NASDAQ:AAPL) supply chain rumors. Apple fans who are hungry for clues about the notoriously secretive Cupertino-based company’s upcoming products can usually count on one of DigiTimes’ unnamed supply chain sources to provide the latest Apple product rumor. On the other hand, the news site has a spotty record when it comes to the accuracy of its Apple rumors.

However, in a recent interview with the media division of the company, DigiTimes Research director Joanne Chien gave an insider’s glimpse of how many Apple rumors originate and why some of them turn out to be untrue. The Chien interview was first spotted by Brooke Crothers at CNET. In the interview with DigiTimes, Chien discussed the “seismic shift that is underway in the mobile device supply chain” and revealed how even a secretive company like Apple is open to scrutiny during the process of bringing a new product to market.

According to Chien, Apple and Samsung (SSNLF.PK) each have a “vertical integration strategy” that seeks to tightly control the design, component choice, and manufacturing process. However, both companies “still rely heavily on the Greater China supply chain.” She noted that DigiTimes Research’s “supply-side approach” to the market allows the company to “monitor shipments made to the vendor from the supply chain, rather than from the vendor to the end-user, which other research firms do.” This unique approach allows DigiTimes Research to get an early glimpse of products that companies like Apple or Samsung are preparing to launch.

“For example, when Apple is getting a product ready for the market, the product is in the supply chain pipeline 6-9 months before Apple even announces its launch,” noted Chien via DigiTimes. “So we may provide shipment data for Apple 1-2 months before it even begins selling in the market, because that is when the supply chain delivers it to Apple.”

In other words, there are two major supply chain junctures where rumors may emerge: approximately six to nine months before a product launch and another at one to two months before launch. Obviously, rumors that emerge from the latter phase closer to the actual product launch will likely be more specific and accurate. This timeline might explain why some of the supply chain rumors reported by DigiTimes are less accurate the further away they originate from the product release date.

Besides revealing details about how Apple’s supply chain is monitored, Chien also noted that smartphone development typically starts with the application processor. This would explain why one of the first iPhone 6 supply chain rumors to emerge immediately after the release of the iPhone 5S was about the next-generation iPhone’s processor. Last September, the Korea Economic Daily reported that Samsung has been contracted to produce 30 to 40 percent of the so-called A8 chip.

Keeping the caveat about long-term predictions in mind, here is the latest iWatch supply chain rumor from DigiTimes. Per the DigiTimes’ sources, the Taiwan-based touch panel maker TPK will be providing the iWatch with its “silver nanowire touch screen technology.”

Follow Nathanael on Twitter (@ArnoldEtan_WSCS)

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