iPhone 5 Demand Remains Strong, Fewer Component Orders Signals Production Efficiencies

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Yesterday it was widely reported that Apple’s reduction in component orders was a sign of soft demand for the iPhone 5. Other analysts have offered an alternate take on it: demand is still strong, Apple just needs fewer extra parts to make the device. Don’t forget that the iPhone 5 has been one of the hardest to manufacture, hard to manufacture also means more extra parts needed to make units that can be shipped.

If you consider Hon Hai Chairman Terry Gou’s remarks about the design of the iPhone 5, then you have to consider that a lot of iPhone 5 parts would get trashed (sure many could be reused, but I bet a lot can’t be) in production. Now as people get better at making the iPhone 5, fewer wasted parts. Fewer wasted parts, fewer need to be ordered to still meet demand.

Also, some of the component parts that are mentioned are also used for the iPod touch. Which sells great during the holidays, but not as well during this early quarter (same with the iPhone 5). Boy Genius Report first brought up the flaws in the WSJ’s logic yesterday and more people are chiming in today. BGR points out that some of the reduction in parts demand is also due to Apple making sure it doesn’t have a glut of extra parts heading into a soft sales time. Soft for Apple means, still really great, but less than the holidays (which by all accounts were epic).

Today there is a growing chorus of analysts chiming in that what we’re seeing is just good supply chain management (remember Tim Cook is the master of the supply chain) and concerns about demand for the iPhone 5 are being overblown. Consensus is, from everyone except folks who are quoted in the WSJ it seems, that Apple stock is still a strong buy and the current dips are not based on real business issues, but rather just rumors and non-news.

Bottom line: There isn’t anything to worry about just yet. Apple is doing just fine and people are still snapping up the iPhone 5 now just like they were before.

Also via: Apple Insider.

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