Nikkei’s iPhone XR production stand-down report: Here we go again

Could be real. Could be FUD. With Nikkei Asian Review you never know.

From Reuters’ Apple cancels production boost for iPhone XR: Nikkei:

Apple Inc. has told its smartphone assemblers Foxconn and Pegatron to halt plans for additional production lines dedicated to the iPhone XR which hit shelves in October, the Nikkei reported on Monday.

Apple had also asked smaller iPhone assembler Wistron to stand by for rush orders, but the company will receive no orders for the iPhone XR this season, the report said, citing supply chain sources.

“For the Foxconn side, it first prepared nearly 60 assembly lines for Apple’s XR model, but recently uses only around 45 production lines as its top customer said it does not need to manufacture that many by now,” the Nikkei quoted a source as saying.

My take: Permit me to quote myself. From Nikkei’s iPhone X supply chain cuts: Here we go again:

Apple to halve iPhone X output on weak holiday sales

Note: The iPhone X was the world’s best-selling smartphone that quarter, despite Nikkei’s 50% output cut.

From Nikkei Asian Review, June 8, 2018:

Apple warns suppliers of 20% drop in new iPhone parts orders

My take: Permit me to quote Daniel Eran Dilger:

Everyone in the industry should know that “channel checks” of Apple suppliers offer largely worthless data. But every January, Japan’s Nikkei newspaper unloads a report suggesting that Apple is scrambling to slash production of its newest iPhone because of disappointing sales. Every year that report has been false, and every year the tech media falls for it.

Among the outlets that took Nikkei’s bait [back in June]:  CNBCReuters, CNN Money, The Street and SA News. Apple fell 2% in overnight trading. Mission accomplished.

See also: Who ya gonna believe, Nikkei Asian Review or your lying eyes?

6 Comments

  1. Gregg Thurman said:

    Obviously Nikkei didn’t get the memo, nobody believes them anymore.

    2
    November 5, 2018
  2. Paul Brindze said:

    Setting aside for a moment how bad a barometer Nikkei has been in the past, this is probably positive.

    Although they mentioned it several time during the conference call, very little press/analyst attention was paid to the statement that one major factor in being conservative in their next quarter revenue guidance was supply channel constraints. They were very clear that the supply channel could not make enough product to meet the expected demand.

    Meanwhile various bear types have been saying how the ASP must drop since the XR will be such a big part of the mix. (I note that these are the same types who always say, against all evidence, that Apple charges to much and must sell cheaper phones).

    These are not cuts in XR lines. They are just not pulling the trigger on big increases. Given the supply chain constraints described, they are , most likely, simply allocating limitted resourses to more profitable lines.

    In other words, this is likely a sign that demand for XS and XS Max (and possibly the new iPad Pro) is higher than it might have been. This will, in my opinion, be another blow out quarter.

    1
    November 5, 2018
  3. Gregg Thurman said:

    “For the Foxconn side, it first prepared nearly 60 assembly lines for Apple’s XR model, but recently uses only around 45 production lines as its top customer said it does not need to manufacture that many by now,” the Nikkei quoted a source as saying.

    This statement has been eating at me a great deal. Now I know why.

    Can you imagine the human resources required to man 15 production lines? How are they going to fire up those lines, rapidly, with new employees that have to be trained? You can bet your bippy that Foxconn doesn’t have spare employees sitting around waiting for the call.

    The same is true for Wistron. You don’t just flip a switch and, voila, you add more production lines for “rush” orders. The supply chain is heavily involved in this as well, and for them to make more means ordering supplies and scheduling production, all of which requires lead times.

    By the time Apple started to receive these hypothetical units we’re going to be in the next quarter.

    Whoever wrote this for Nikkei has no knowledge of production, and it shows.

    It’s a crying shame that “CNBC, Reuters, CNN Money, The Street and SA News” are just regurgitators and know nothing about that which they regurgitate. If their job is to inform they are failing badly. What a disservice they do their viewers.

    1
    November 5, 2018
  4. Gregg Thurman said:

    From Michael Bapis of Vios Advisors this morning on CNBC. I post his comment because this is my feeling as well.

    “Apple is far from a sell at this juncture, said Michael Bapis, managing director with Vios Advisors at Rockefeller Capital Management. He said investors likely “panicked” around Apple’s earnings report, and he would stick with the name in the long term.

    “I would own Apple all day at 15 times next year’s earnings, getting a dividend of 1.5 percent. I don’t think you can find better than that. As far as where to hide, we’re seeing a rotation out of a lot of the high-volatility, low-earnings, FANG-type of stocks. We’re seeing the rotation move more into earnings-driven companies in the technology sector,” he said.”

    Apple is an earnings-driven tech company. Share buyback anyone?

    1
    November 5, 2018
  5. George Ewonus said:

    My recent experience seems to be at odds with all this doom and gloom. Bought both the new iPad (11 inch) and the new (13 inch) MacBook Air the day they were announced. Delivery date was to be November 7th. Since I buy through the Business side of Apple, it took an additional 24 hours for the orders to be completed. Now the projected delivery date for the 11 inch iPad is November 20 to 22 and the new date for the MacBook Air is November 15 to 19th. Doesn’t sound like Apple has problem selling them – just meeting demand. Ignoring the usual FUD (I’ve held Apple shares for 2 decades) I bought more shares this morning. It was actually fun!

    0
    November 5, 2018

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