11-15-2018 - Misreading Apple’s Supply Chain and iPhone XR
Yesterday, Carolina Milanesi and I were on a panel at the UBS global technology summit, and the focus of our panel was Apple. As would be expected, the audience consisted of a large number of institutional investors who had some interest in Apple at a financial level. Given the timing of some recent news from some of Apple supply chain worries, this was a hot topic. I tweeted a slightly sarcastic tweet that got quite a bit of engagement on Twitter about the recycling of worrying supply chain headlines and how this always reminds us of how little people understand of Apple’s supply chain. Even Apple CEO Tim Cook has continually tried to remind investors that trying to gain insight into Apple’s supply chain for signals is a fool’s errand. I’d like to briefly explain why this is the case and how that relates to the worry of iPhone XR demand.
Apple’s Fluid Supply Chain
Apple’s supply chain scale is truly unprecedented. However, it has not been without its hiccups and missteps as Apple has learned to scale the worlds most popular smartphone to meet consumer demand. Apple has faced low-yields with suppliers on innovative components, run into manufacturing process challenges because of the intricate process of some of their hardware designs, and in some quarters these issues meant a supply shortage in the face of overwhelming demand. Even as late as last year with the iPhone X we saw Apple face challenges as they transition to a new hardware design and technology process.
But, through all these years, Apple has learned how to build one of the most fluid supply chains in the history of manufacturing. Most companies do not face the kind of manufacturing challenges Apple does because most companies do not ship technology innovation at the scale that Apple does. This makes most companies supply chain a bit easier to manage. But when I say Apple’s manufacturing is fluid, what I mean is that they can respond to waves of demand and other market changes in real-time. If demand goes up, they can scale up quickly to meet that demand and if it slows they can scale down. The primary strategy for this has everything to do with why we get a range of supplier reports where one quarter an Apple supplier has a huge quarter, and in the same quarter, another supplier will suggest a decline.
Read More $ Tech.pinions |
