iPhone production falling?

by SR on January 10, 2013

A week or two back before the New Year I was talking with a mid-level manager at a Japanese component supplier. They manufacture parts that are used in one of the iPhone 5 subsystems and this guy oversees that particular product line. “iPhone production seems to be coming off rapidly” he confided to me. I was surprised by this and said so. “It’s inventory” he said “it seems to be too high”.

Now, this guy is solid, sensible and conservative. Your archetypal salariman, in other words. He owns no stock in Apple. Indeed it’s unlikely that he (directly) owns stock in anything. He also understands seasonality, so that’s unlikely to be the cause of the dip in production he mentioned. Still, while I trust this source, he might be mistaken and I haven’t been able to confirm his statements through other means. Perhaps a short-term move related to the rumoured move towards a low-cost iPhone? Who knows. Would be interested in your comments.

Incidentally, my days of covering the electronics supply chain are over, but I retain a casual interest in tech hardware. Just to clarify before I’m asked, I hold no positions in Apple, its competitors or any other stocks related to the electronics supply chain. What matters (to me) is the level of investor interest towards autos, auto parts, machinery and other areas that I follow more closely. If investors are becoming less interested in tech then maybe they will switch some assets into cyclicals like machinery or consumer durables like autos. If they’re getting bulled up on tech – like Apple – then maybe there will be less appetite for those two sectors just mentioned.

Edit: Looks like I’m several weeks behind the curve on this one, as production cuts were mentioned in this Forbes article from before Christmas. At least my source was correct though, extending his excellent track record.

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