We're having fun following Brian White's travels up and down Apple's supply chain
FORTUNE — Topeka’s Brian White is on a week long “technology tour,” meeting — as some analysts like to do — with his contacts in Apple’s AAPL supply chain.
These are the companies that manufacture mission-critical components — such as touchscreens — for Apple’s digital devices. They are also rich sources of the kind of industry gossip that can make an Apple analyst seem like he’s in the know.
White began issuing dispatches from his Asian road trip last Thursday and on Tuesday he e-mailed his fourth. Some excerpts of interest to Apple investors:
- Day 1: “iPad Mini” is No Walk in the Park for Suppliers and We Expect 5-7 Million Units. Similar to the iPhone 5, we sensed that suppliers have found the specs around Apple’s 7.85-inch “iPad Mini” to be a challenge and yields have been frustrating. In our view, this is the reason the “iPad Mini” is 4-6 weeks behind our original launch expectation that we discussed in June. Despite continued yield challenges, the supply chain feels the much anticipated iPad Mini is on track to reach acceptable volume levels for a launch over the next month. That said, we believe that supply constraints will initially hold back the full sales potential during the first month or so of the launch.
- Day 2: As Notebooks Continue to Struggle, More Signs of the New “iPad Mini”. Our meeting with an ODM highlighted weaker than expected demand in 3Q12 for notebook programs with a sharp sequential unit decline anticipated but hope for a modest uptick in 4Q12… We sensed much more enthusiasm around the tablet market and walked away with confidence that Apple did not skimp on the aesthetics of the much anticipated “iPad Mini”. In fact, we believe the “iPad Mini” could outshine the new iPad in terms of how the device feels in a consumer’s hands. At the same time, the new “iPad Mini” is more challenging to produce than prior iPad iterations and we believe supply will initially be constrained. That said, we remain comfortable with our 5 million to 7 million “iPad Mini” unit forecast for the December quarter.
- Day 3: China to Get iPhone 5 in December, Selling Out in Hong Kong. We expect Apple’s iPhone 5 to launch in China this December with its two existing carriers. Already, certain China Unicom stores have sold out of the iPhone 4S to avoid an inventory situation ahead of the iPhone 5 launch. Hong Kong already has “iPhone 5 fever” and the stores we visited were sold out. At Apple’s retail store, the iPhone 5 can be ordered online and a lottery process determines who is eligible for pickup at the store the next day. Based on our conversations, you might have a better shot at winning the lottery than getting the iPhone 5 the next day. Also, carriers such as SmarTone are taking orders for the iPhone 5 with delivery within 2-3 weeks. Clearly, iPhone 5 supply remains an issue around the world.
- Day 4: Overall Sluggish Trends in the Tech Supply Chain. Our meeting with a component vendor pointed to a sluggish demand environment through the end of the year. The one bright spot was the ramp of new Apple products such as the iPhone 5 and the iPad Mini; however, the supply chain continues to struggle with yields and this is especially true for the iPhone 5. As such, we estimate that the iPhone 5 could be at a 32 million to 40 million unit rate in the December quarter, rather than the 40 million to 50 million that many had believed was possible ahead of the debut. Keep in mind, the iPhone 5 has only ramped in 31 countries but Apple has previously discussed a target of 100 countries by year end; thus the iPhone 4 and iPhone 4S are still selling in these other countries. According to iFeng, two of the four top selling smartphones during the Golden Week holiday in China were the iPhone 4S (#1) and the iPhone 4 (#2).
Updates as they come in.