Gene Munster: Apple product lead times halved

But shipping times will get stretched again after next week's "Peek performance" event.

From a note to Loup Ventures subscribers that landed on my desktop late Wednesday: 

From mid-November 2021 to March 2nd, we have been tracking lead times at Apple for ten products in six countries. We've found that supply has improved 2x since January 23rd.

This improvement is inline with our expectations and inline with company guidance. The combination of seasonal effects and improvements in the supply chain appear to be improving product availability. We estimate a $3.5B headwind from tight supply in the March quarter, which marks an improvement from about $6.5B in the December 2021 quarter. That said, new products will be released in the next month and will result in supply headwinds spilling into the June quarter.

Apple's March 8th "Peek Performance" event will likely showcase: (1) a new low cost Phone SE that should appeal to a broader audience, (2) a new iPad Air, and (3) one or two new Macs powered by Apple silicon. These new product launches will likely extend lead times once again.

Putting it all together, we believe that Apple will exit the March quarter with a supply chain headwind inline with the $3.5B guidance given late in January. More importantly, we expect the upcoming launch of new products to result in a supply chain headwind impacting the June quarter, which Apple will likely outline when they report in March. Apple investors are now well equipped to make adjustments to reported numbers to factor in the headwind, and have confidence that sales lost in the March quarter will be captured in the June quarter.

My take: Some useful specifics...

  • Typical lead times for Apple products in the third month of the March quarter are "same day."
  • New iPads remain in the tightest supply, with new model lead times averaging 29 days. This is an improvement from the 44 days we observed in the month of January. The iPad accounts for about 8% of sales.
  • New MacBook Pro lead times declined from 24 days to 7 days at the end of January. The Mac accounts for about 10% of sales.
  • The iPhone 13 has an average delivery time of "same day." That is an improvement from 2 days we observed at the end of January. The iPhone accounts for just under 53% of revenue.
  • The new Apple Watch continues to show "same day," consistent with the end of January. Apple Watch accounts for just over 5% of  revenue.

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