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Apple's second-half iPhone production to rise nearly 100% to 58 million units

post #1 of 22
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Orders to Apple's manufacturing partners for the second half of the year indicate iPhone shipments will grow roughly two-fold through a combination of existing iPhone 4 models and next-generation iPhone 5s, setting the company up for what's likely to be two consecutive record-breaking quarters in a row.

iPhone 4 and iPhone 5

In an update on Apple's supply chain ongoings sent to clients on Tuesday, FBR Capital Markets analyst Craig Berger said Apple has revised upwards its current third quarter production to 27.9 million units from 23.6 million units, representing a sequential rise of 33%, mostly from GSM versions of the handset.

"[Third quarter] iPhone builds were revised higher due to an additional 3.1M iPhone 4 builds (to 15.2M units) and due to an additional 1.4M iPhone 5 builds (to 6.8M units)," he wrote. "We still see 3M builds planned on the legacy iPhone 3GS to satisfy demands from various US and European carriers calling for a low cost device to compete with Android handsets."

The remaining 3 million units Apple intends to produce during the third quarter will be of the CDMA flavor, which "were ratcheted up slightly," Berger added.

For the fourth quarter, the analyst said Apple's build plan remains at 30 million units, which is unchanged, though he's handicapping reasonably good odds that Apple could produce as many as 35 million iPhones during the three-month period ending December should upside demand materialize.

"We see most of the [fourth quarter] iPhone production on the iPhone 5 (23M units), as iPhone 4 production drops off dramatically," he wrote. "Apple's current build plan drives total production to 102M units in calendar 2011, and likely driving about 95M units of sales."




Given the new iPhone build estimates, Berger said he believes Apple will sell a theoretically possible maximum of 58.2 million units during the second half of 2011, which represents nearly a 100% increase from the 30.3 million iPhones it sold during the same period last year.

Should the analyst's build data prove accurate, iPhone shipments for both the third and fourth quarter will set new records for Apple, which only recently eclipsed the 20-million-unit iPhone milestone for a single quarter during its record-shattering second quarter of 2011.



iPad 2 and iPad 3

Meanwhile, Berger's Far Eastern contacts say third quarter production estimates for iPads were revised up from 13.8 million units last month to 17.5M units, representing a 62% sequential rise in shipments.

However, fourth quarter iPad production has reportedly been trimmed back from 17M units to 13.7M units given that Apple has pushed back the manufacturing ramp of the "iPad 2 Plus" (iPad 3) due to retina display manufacturing yield challenges.

"We understand this display is highly dependent on Sharp's TFT LCD yield rates, with Samsung and LG reportedly unable to produce the necessary display panel in sufficient yields too," he wrote. "Calendar 2011 iPad builds now total 47M units, putting Apple's prior production goal of 45M-50M iPads in 2011 within reach."




Given the new iPad build estimates, Berger now estimate Apple can sell a theoretically possible maximum of 17M units in the third quarter and 13.5M units in the fourth, while still building channel inventory slightly. However, he warned that actual sales to consumers could be somewhat less than the sum of those totals, as Apple builds internal and channel inventory ahead of the holidays.

Nevertheless, Apple is still estimated to sell between 28 and 30 million iPads in the second half of 2011, driving another small growth spurt for Broadcom and Qualcomm, which supply Apple with GPS chip components and baseband components, respectively.
post #2 of 22
Since you already have a two-line headline, you might have covered the whole story by adding something like "iPad expectations lowered".

This is also a newsworthy part of what Berger is saying, and I find it very strange. If the 3.3 million high-res iPads are now "pushed back," wouldn't low-res iPads be increased to keep supply up?

Anyway, some iPad conservatives here at AI, who take every opportunity to say there never was a plan for a 2011 high-res version, will miss another chance to say "I told you so" because your headline falls short of the whole story.

On the other hand, it would save a lot of rumor-mongering if DigiTimes and these analysts would just read AI to find out how Apple is going to run their iPad strategy, instead of nagging all those "upstream supply partners" in Taiwan and elsewhere.
post #3 of 22
A lot of us own both an iPhone and an iPad. It never made sense to me that Apple would force us to choose which to upgrade, by bringing both models out at the same time. Staggering their releases keeps them in the news, and I would imagine helps with human resource management within Apple.
post #4 of 22
Wow. I still remember when Steve Jobs said that their goal was to have 1% of the market.
post #5 of 22
Quote:
Originally Posted by AppleInsider View Post

Given the new iPhone build estimates, Berger said he believes Apple will sell a theoretically possible maximum of 58.2 million units during the second half of 2011, which represents nearly a 100% increase from the 30.3 million iPhones it sold during the same period last year.

Should the analyst's build data prove accurate, iPhone shipments for both the third and fourth quarter will set new records for Apple, which only recently eclipsed the 20-million-unit iPhone milestone for a single quarter during its record-shattering second quarter of 2011.

To finish the entire picture, IDC has predicted 472M smartphones to sell this year, while IMS is a bit more conservative at 420 million new smartphones ending up in consumer's hands before the year is up. Gartner in the meantime is projecting over 630 Million smartphones sold in 2012. It's likely impossible for Apple to produce even half that number of smartphones.

The result is that some of the regulars here are quite right is stating that Apple isn't going after majority market share, which they don't have the capacity to do. Instead they've aimed at the top end where the profits are.
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post #6 of 22
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Originally Posted by Gatorguy View Post

The result is that some of the regulars here are quite right is stating that Apple isn't going after majority market share, which they don't have the capacity to do. Instead they've aimed at the top end where the profits are.

I thought we had established that all smart phones cost about the same. Where is the 'top end' of which you speak?

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post #7 of 22
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Originally Posted by mstone View Post

I thought we had established that all smart phones cost about the same. Where is the 'top end' of which you speak?

Who's "we"?
Anyway, there's a few phones that play in the same price range as Apple's iPhone 4G, such as the Samsung Galaxy SII. But the published prices are the retail ones, not the deals negotiated with the carrier's. Because of Apple's high profile and excellent advertising plans they've managed to command a premium for the "privilege" of selling the iPhone. I'd be pretty surprised if any other phone deals struck with the sellers can approach the margins that Apple can demand.
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post #8 of 22
Quote:
Originally Posted by Gatorguy View Post

Who's "we"?
Anyway, there's a few phones that play in the same price range as Apple's iPhone 4G, such as the Samsung Galaxy SII. But the published prices are the retail ones, not the deals negotiated with the carrier's. Because of Apple's high profile and excellent advertising plans they've managed to command a premium for the "privilege" of selling the iPhone. I'd be pretty surprised if any other phone deals struck with the sellers can approach the margins that Apple can demand.

Well that makes no sense to me whatsoever. Aiming at the top end, as you say, has little to nothing to do with negotiated price with carriers. Apple makes profits because they can manufacture iPhones cheaper than the competition can build theirs by way of designing efficient and innovative assemblies, huge bulk orders of components and pre-paying for them, resulting in significant discounts. That is where the margins come from. $200 is all the consumer pays. If that is a high end consumer, how much does the low end consumer pay for an Android or BB smart phone?

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post #9 of 22
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Originally Posted by mstone View Post

Well that makes no sense to me whatsoever. Aiming at the top end, as you say, has little to nothing to do with negotiated price with carriers. Apple makes profits because they can manufacture iPhones cheaper than the competition can build theirs by way of designing efficient and innovative assemblies, huge bulk orders of components and pre-paying for them, resulting in significant discounts. That is where the margins come from. $200 is all the consumer pays. If that is a high end consumer, how much does the low end consumer pay for an Android or BB smart phone?

There's nothing I've seen that convinces me that Apple can have an iPhone or iPad built by a third party for significantly less than someone like Samsung who actually produces much of the hardware themselves, and even sells it to Apple, at a profit for their mobile devices.

No, IMHO much of Apple's high profit margins come from their negotiated contracts with the carrier's coupled with their own retail division that sells direct to consumers avoiding middleman discounts.

Also, FWIW the 32GB iPhone goes for $300 at Verizon, slightly more than most of the premium Android phones.
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post #10 of 22
Quote:
Originally Posted by acslater017 View Post

Wow. I still remember when Steve Jobs said that their goal was to have 1% of the market.

I think about that every time I see one of these market share reports
post #11 of 22
Quote:
Originally Posted by acslater017 View Post

Wow. I still remember when Steve Jobs said that their goal was to have 1% of the market.

Seriously. They have a little over 5% already, way over his number.
post #12 of 22
Quote:
Originally Posted by mstone View Post

I thought we had established that all smart phones cost about the same. Where is the 'top end' of which you speak?

Maybe he's referring to the $49.00 3GS?
post #13 of 22
Quote:
Originally Posted by Gatorguy View Post

There's nothing I've seen that convinces me that Apple can have an iPhone or iPad built by a third party for significantly less than someone like Samsung who actually produces much of the hardware themselves, and even sells it to Apple, at a profit for their mobile devices.

No, IMHO much of Apple's high profit margins come from their negotiated contracts with the carrier's coupled with their own retail division that sells direct to consumers avoiding middleman discounts.

Also, FWIW the 32GB iPhone goes for $300 at Verizon, slightly more than most of the premium Android phones.

Whatever... I just don't think the "Top End" moniker fits in the smart phone space. In MacBook Pros some might suggest that there is an Apple tax (to consumers) but even that falls short since to configure an equally equipped notebook from another vendor, it would cost about the same.

When I think of Apple targeting the "Top End" I only equate that with their ability to attract more sophisticated, well educated buyers who appreciate their sense of style and high level of materials, fit and finish, but it doesn't cost any more when you actually look closely at the numbers.

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post #14 of 22
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Originally Posted by mstone View Post

Whatever... I just don't think the "Top End" moniker fits in the smart phone space. In MacBook Pros some might suggest that there is an Apple tax (to consumers) but even that falls short since to configure an equally equipped notebook from another vendor, it would cost about the same.

When I think of Apple targeting the "Top End" I only equate that with their ability to attract more sophisticated, well educated buyers who appreciate their sense of style and high level of materials, fit and finish, but it doesn't cost any more when you actually look closely at the numbers.

The premium Samsung Galaxy SII, which meets/exceeds the iPhone 4G specifications in almost every category, shows an off-contract price of $600.
(Of course as you suggest, the uneducated trailer-trash knuckle-draggers that buy Android instead of iOS couldn't possibly earn enough or deserve to buy the iPhone anyway, unlike the elite, intelligent, highly educated and well-paid people such as yourself who always make the obvious and wise choice of Apple products.)

And what is the iPhone 4G 32GB off-contract price?
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post #15 of 22
This is quickly becoming a gatorboy show so I will ignore his largely off topic ramblings. I am intrigued by the fall off from Q3 to Q4 in iPads. Ludicrous unless a new iPad is, in fact, being produced in whatever limited markets. As for Apple next year they are growing at 100% a year and may sell, therefore, 70m in 4q 2012, something like 160m in the year and more if they get a smaller model.
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post #16 of 22
Quote:
Originally Posted by Gatorguy View Post

The premium Samsung Galaxy SII, which meets/exceeds the iPhone 4G specifications in almost every category, shows an off-contract price of $600.
(Of course as you suggest, the uneducated trailer-trash knuckle-draggers that buy Android instead of iOS couldn't possibly earn enough or deserve to buy the iPhone anyway, unlike the elite, intelligent, highly educated and well-paid people such as yourself who always make the obvious and wise choice of Apple products.)

And what is the iPhone 4G 32GB off-contract price?

So that's all you could come up with? Classy!

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post #17 of 22
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Originally Posted by asdasd View Post

This is quickly becoming a gatorboy show so I will ignore his largely off topic ramblings. I am intrigued by the fall off from Q3 to Q4 in iPads. Ludicrous unless a new iPad is, in fact, being produced in whatever limited markets. As for Apple next year they are growing at 100% a year and may sell, therefore, 70m in 4q 2012, something like 160m in the year and more if they get a smaller model.

Exactly, a projected drop doesn't make sense unless some manufacturing is being diverted, or has been diverted. But do you mean "for whatever limited markets"?
post #18 of 22
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Originally Posted by mstone View Post

So that's all you could come up with? Classy!

My apologies. It just rankles me, and reflects poorly on Apple users IMHO, when they make comments that claim owning Apple products makes you more sophisticated, smarter, better-looking, a greater human being, whatever. It plays right into the "elitist" tag that sometimes get pasted on them. BMW and Lexus play the same game in their advertising, suggesting with images and comments that owning one makes you "better" than those around you. It doesn't.
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post #19 of 22
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Originally Posted by Flaneur View Post

Exactly, a projected drop doesn't make sense unless some manufacturing is being diverted, or has been diverted. But do you mean "for whatever limited markets"?

Yes, thanks. Given the production problems they may not release worldwide. I don't think the iPad 1 or 2 were worldwide releases on their initial launch.
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post #20 of 22
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Originally Posted by asdasd View Post

This is quickly becoming a gatorboy show . . .

Yeah I was getting a little too chatty and overbearing. Thanks for calling my attention to it.
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post #21 of 22
Quote:
Originally Posted by acslater017 View Post

Wow. I still remember when Steve Jobs said that their goal was to have 1% of the market.

Apple has a history of guiding their estimates on the low side.

Why does Apple bashing and trolling make people feel so good?

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post #22 of 22
Quote:
Originally Posted by Gatorguy View Post

My apologies. It just rankles me, and reflects poorly on Apple users IMHO, when they make comments that claim owning Apple products makes you more sophisticated, smarter, better-looking, a greater human being, whatever. It plays right into the "elitist" tag that sometimes get pasted on them. BMW and Lexus play the same game in their advertising, suggesting with images and comments that owning one makes you "better" than those around you. It doesn't.

Hey, no apologies necessary. I normally agree with your posts. I was just calling you out on that one point, that iPhones don't really cost more than the other smartphones.

No worries.

m

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