JP Morgan’s Gokul Hariharan, who covers contract manufacturer Hon Hai Precision, told clients in a note — as reported by “Barron’s” (http://macte.ch/zy7cb) — that Apple appears to be cutting production of the iPad for the fourth quarter, citing multiple sources from the electronics supply chain. However, Susquehanna’s semiconductor analyst Chris Caso disagrees.
“Multiple supply chain vendors indicate a 25% cut for 4Q11 iPad sell-in orders (first cut ever that we have seen) in the past two weeks, which would mean that Hon Hai ‘s iPad shipments may be down 25% qoq [quarter-over-quarter] in 4Q11 (from sell-in of 17 million in 3Q11 to 13 million in 4Q11),” writes Hariharan.
However, Case counters: “We believe chatter regarding iPadproduction cuts are misleading-we have seen pull-ins, not cuts. We have noted recent comments by competitors discussing iPad production cuts for 4Q. Our recently published AAPL supply-chain checks noted a sequential decline in 4Q iPad builds from 17-19 million units in 3Q to 11-13 million units in 4Q. However, the 4Q sequential decline was accompanied by an increase in 3Q builds, leading us to conclude that production was likely pulled-in from 4Q to 3Q. We believe AAPL has attempted to accelerate production in 3Q to ensure product availability for the holidays. In addition, we expect AAPL will need to modulate production of iPad2 to prepare for iPad3. We expect iPad3 production to start in late 4Q/early 1Q.”
My prediction: iPad orders aren’t down. If anything, they’ll be going up as the holiday season approaches.
— Dennis Sellers