Apple reportedly reduced iPad 2 orders because it bought 16M last quarter

Posted:
in iPad edited January 2014
An overabundance of iPad 2 components purchased by Apple last quarter has allowed the company to actually draw down its orders ahead of the holidays due to an excess of parts, which will allow it to build between 4 million and 5 million units.



Last quarter, Apple sold a record 11.2 million iPad units, representing a year over year sales increase of 166 percent. But the company actually placed orders for components that could build between 15 and 16 million iPad units, according to DigiTimes.



Apple now has a stockpile of between 4 million and 5 million iPad 2 units in its supply chain, which has put the company in a position to adjust its orders for the current holiday quarter. Specifically, panel shipments for Samsung, LG and Chimei Innolux are said to be affected in the quarter.



"Due to inventory adjustments at Apple, LG Display saw its shipments of 9.7-inch panels to Apple decline from three million units in September to 2.5 million units in October," the report said. "Samsung managed to keep its shipments of 9.7-inch panels flat at two million units in October, while CMI slashed its shipments from 700,000 units to 350,000 units during the same month, said the sources."



While Apple is allegedly drawing down inventory for its current-generation iPad 2, the company is already gearing up for its third-generation iPad, expected to debut in early 2012. The report said that both Samsung and Sharp are already shipping panels for the next-generation iPad, while TPK Holding and Wintek are expected to ship panels for the third-generation tablet in November and December.



Earlier this month, the same publication indicated that Apple is stockpiling about 2 million third-generation iPad units by the end of 2011. The device is expected to be thinner and have a higher-resolution screen than the current iPad 2.







As for the rumored drawdown in purchases of iPad 2 components, Taiwan's Commercial Times claimed earlier this month that Apple had cut orders not only for the iPad 2, but also for the iPhone 4S, leading into the fourth quarter of calendar 2011. The report claimed that sales were not as high as Apple anticipated, and the company's stock subsequently dropped off.



But analysts on Wall Street dismissed concerns about the iPhone 4S, as the newly launched handset has been consistently selling out at Apple retail stores, while new international launches have drawn huge crowds around the world.
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Comments

  • Reply 1 of 46
    lkrupplkrupp Posts: 7,081member
    It's all about manipulating AAPL, period.
  • Reply 2 of 46
    Nice spin being placed upon a decline in demand for the iPad. It almost makes the decline sound like a good thing. The problem is, even if you believe the spin, it casts Apple in a bad light, i.e., they are not able to manage their parts inventory properly.
  • Reply 3 of 46
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by AppleInsider View Post


    Earlier this month, the same publication indicated that Apple is stockpiling about 2 million third-generation iPad units by the end of 2011. The device is expected to be thinner and have a higher-resolution screen than the current iPad 2.



    Why do people keep paying attention to someone who has so consistently been wrong in the past?



    Oh, yeah. Click-whoring. Never mind.
  • Reply 4 of 46
    mjtomlinmjtomlin Posts: 1,855member
    Quote:
    Originally Posted by camper View Post


    Nice spin being placed upon a decline in demand for the iPad. It almost makes the decline sound like a good thing. The problem is, even if you believe the spin, it casts Apple in a bad light, i.e., they are not able to manage their parts inventory properly.



    There is no "decline in demand", Apple will sell more iPads this quarter than last quarter, that's called an increase in demand. But nice attempt at misconstruing the facts.



    All that's really happening here is that Apple, AS THEY ALWAYS HAVE, are ramping down production of the current model to clear inventory for a new model. It is happening sooner than usual because manufacturing has FINALLY been able to keep up and surpass demand.



    During the 3rd calendar quarter, Apple has a history of ramping up production in an attempt to stock pile inventory for the back to school season and the following holiday season in the 4th quarter. Previously, manufacturing has barely been able to keep up with demand, so orders from Apple to component suppliers usually have stayed steady through the 4th quarter.



    However this year, it seems that Apple has finally been able to buy enough manufacturing lines, that they can begin to decrease production before the release of the next model.
  • Reply 5 of 46
    freerangefreerange Posts: 1,587member
    Quote:
    Originally Posted by camper View Post


    Nice spin being placed upon a decline in demand for the iPad. It almost makes the decline sound like a good thing. The problem is, even if you believe the spin, it casts Apple in a bad light, i.e., they are not able to manage their parts inventory properly.



    You have absolutely no idea what you are talking about. Apple stockpiled components ahead of, and in anticipation of the holidays and therefore doesn't need to stay at the same order levels for iPad 2, especially as they prepare for the new iPad 3. So before you make such stupid statements you should really get yourself an education about this company and how they operate.
  • Reply 6 of 46
    Wait, isn't stockpiling units like this the sort of thing that you guys normally criticise Samsung, HTC et-al about?
  • Reply 7 of 46
    freerangefreerange Posts: 1,587member
    And the shorts are having a wonderful holiday season as Apple stock continues to be manipulated.
  • Reply 8 of 46
    Quote:
    Originally Posted by lkrupp View Post


    It's all about manipulating AAPL, period.



    5 points drop today I bet
  • Reply 9 of 46
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by neiltc13 View Post


    Wait, isn't stockpiling units like this the sort of thing that you guys normally criticise Samsung, HTC et-al about?



    EVEN IF the report is true (which I doubt), there's a difference.



    Apple would have done what most companies with good retail presence do. Build plenty of units for the Christmas season to make sure that they have plenty of stock. Since sales will drop after the Christmas season and there's a lead time to get them into the stores, it would not be surprising for production plans for Nov and Dec to be lower than Aug, Sept, and Oct.



    (Of course, when Apple's Jan-March sales are lower than Oct-Dec, we'll get another round of "iPad sales decline" fear mongering).



    What Samsung, HTC, et al appear to have done was manufacture far more units than they could sell to stuff the channel - and will then end up giving credits for unsold units. How many unsold iPads do you think there will be?
  • Reply 10 of 46
    Quote:
    Originally Posted by neiltc13 View Post


    Wait, isn't stockpiling units like this the sort of thing that you guys normally criticise Samsung, HTC et-al about?



    The difference is that Apple has sold 11 million of its stocked iPads and is projected to sell the remaining units during the holidays. Plus this stockpile is intended as they can reduce the amount of manufacturing for the current iPad and focus on producing the 3rd generation iPad and ramp up 4S related productions and reservation of components through the holidays.



    The criticism comes from stockpiling millions of units and have no demand/not selling them.
  • Reply 11 of 46
    addaboxaddabox Posts: 12,660member
    Quote:
    Originally Posted by neiltc13 View Post


    Wait, isn't stockpiling units like this the sort of thing that you guys normally criticise Samsung, HTC et-al about?



    Can't recall anyone badmouthing Samsung for stockpiling components. The usual beef is with channel stuffing, where unsold inventory sits on retailers shelves while helping inflate "shipped" numbers that are then conflated with "sold."
  • Reply 12 of 46
    801801 Posts: 271member
    For some reason, I think Tim Cook knows what he's doing.
  • Reply 13 of 46
    Quote:
    Originally Posted by neiltc13 View Post


    Wait, isn't stockpiling units like this the sort of thing that you guys normally criticise Samsung, HTC et-al about?



    Get back to me if Apple ever has a fire sale.



    (actually, a lot of the original Galaxy Tabs weren't even sold... they were given away free if you bought a washer, stove, couch, toaster, deep fryer, gerbil etc.)
  • Reply 14 of 46
    thrangthrang Posts: 765member
    Quote:
    Originally Posted by neiltc13 View Post


    Wait, isn't stockpiling units like this the sort of thing that you guys normally criticise Samsung, HTC et-al about?



    No channel stuffing to boost short terms numbers is what they do - Apple does not do this.



    Note how a lot of companies talk about how many units "shipped" vs, "sold." Apple talk sold, companies trying to mask the reality tend to talk shipped.
  • Reply 15 of 46
    blitz1blitz1 Posts: 412member
    Will you fandroid trolls ever learn?



    Apple product on the shelves = product sold

    Android product on the shelves = channel stuffing, shipping, ...



    Apple product available online: inventory about to be sold

    Android product available online: inventory to be written off



    Never mind the 600,000+ activations per day
  • Reply 16 of 46
    conradjoeconradjoe Posts: 1,887member
    Quote:
    Originally Posted by 801 View Post


    For some reason, I think Tim Cook knows what he's doing.



    Here's my guess:



    The component manufacturers are sitting on Apple parts which they have already paid to make, but have not yet been able to sell to Apple. Apple cuts orders. Apple demands discounts and threatens to further cut orders. Desperate component manufacturers comply.



    Tim is masterful.
  • Reply 17 of 46
    A little off topic I know, but is anyone else having problems with their Safari crashing? Mine started a few weeks ago, and crashes EVERY session I uses my iPad. At least two or three times a session. Getting really tired of this......
  • Reply 18 of 46
    xsuxsu Posts: 401member
    Quote:
    Originally Posted by neiltc13 View Post


    Wait, isn't stockpiling units like this the sort of thing that you guys normally criticise Samsung, HTC et-al about?



    Stockpiling units in face of uncertain demand is stupid.



    Stockpiling units in anticipation of heavy demand is good inventory management.
  • Reply 19 of 46
    Quote:
    Originally Posted by Blitz1 View Post


    Will you fandroid trolls ever learn?



    Apple product on the shelves = product sold

    Android product on the shelves = channel stuffing, shipping, ...



    Apple product available online: inventory about to be sold

    Android product available online: inventory to be written off



    Never mind the 600,000+ activations per day



    When will you learn that now that Steve is dead, Apple is on its way back to the 1990's, an also run.
  • Reply 20 of 46
    • Estimate Requirements

    • Add Cushion (Acceptable ± margin of error)

    • Execute

    • Measure Perormance

    • Determine Necessary Adjustments

    • Make Adjustments

    • Repeat



    It's called Supply Chain Management!





    It is done on a micro level (part) a macro level (product) and every level in between!



    It is done yearly, quarterly, monthly... daily if necessary!



    It is what Apple does better than anyone else.





    And where possible they select and reward suppliers who are agile enough to adjust to changing requirements.





    It does Apple no good if its suppliers are losing money sitting on unsold parts or manufacturing capacity.



    Apple furnishes its suppliers with reasonable estimates on its requirements and is contractually allowed to adjust these as needed. A good supplier prepares for this and does it's own Estimate-Adjust cycle.





    To put it in Household terms:



    We want at least 1 turkey, 1 ham and 1 Prime Rib for the holidays.



    If we can find a good price we could buy more than 1 each.



    We, normally, have no space for these in the freezer.



    For the past month or so we have been drawing down our food (parts) inventory to free up freezer space to meet anticipated needs.



    We have a little extra space in the Fridge Freezer -- if some [un]anticipated food item catches our eye.



    We plan for opportunity -- and to deliver the best results at the lowest cost.



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