Apple's iPhone production could fall 40%, hurt chip suppliers' Q4s, analysts say
That the "iPhone production plans are being revised lower suggests that the global macroecomomic weakness is impacting even high-end consumers, those that are more likely to buy Apple's expensive gadgets, and that no market segment will be spared in this global downturn," FBR Research reports.
By Suzanne Deffree, Managing Editor, News -- EDN, November 3, 2008
Even powerhouses like Apple Inc are not immune to the financial crisis' impact.
A report out this morning from FBR Research states that the semiconductor market analysis firm's most recent supply chain checks suggest Apple's iPhone 3G production forecast is now under pressure.
"While our previous checks indicated that iPhone production would fall about 10% sequentially in calendar Q4, our new checks indicate that iPhone production could fall more than 40% sequentially in Q4," Craig Berger and Robert Pikover, FBR Research analysts, wrote in the report.
"We believe a similar amount of production was removed from the calendar Q1 build forecast, though there is still plenty of time to modify that forecast should further revisions be necessary," they stated.
Chip suppliers into the iPhone will feel a pinch if FBR Research's supply chain checks are correct. FBR Research expects such chipmakers will see negative revenue impacts in Q4 as a result of lower iPhone production.
"We believe Apple is a good proxy for broader consumer demand given that it has the hottest, sleekest, most desirable products available today," Berger and Pikover said. "That the firm's iPhone production plans are being revised lower suggests that the global macroecomomic weakness is impacting even high-end consumers, those that are more likely to buy Apple's expensive gadgets, and that no market segment will be spared in this global downturn."
FBR Research made specific note of Broadcom, which co-supplies the iPhone's GPS chip and also supplies its touchscreen controller. Broadcom contributes approximately $3 of the iPhone's content, according to FBR Research, which further estimated the company's Q4 revenue will be impacted by about $12 million or about 1% of revenues due to lower iPhone production plans.
FBR Research also noted Marvell, which supplies the handset's Wi-Fi chip and estimated the company's Q4 revenue will be impacted by about $10 million or about 1% of revenues due to lower iPhone production plans. According to the firm, Marvell contributes between $2 and $3 of the iPhone's chip content.
The market analysis company lastly pointed to Linear Technology, which supplies the iPhone's battery/USB charger, as it did in the prior generation. FBR Research estimated Linear Technology's Q4 revenue will be impacted by about $5 million or 2% of revenues due to lower iPhone production plans. FBR Research estimated Linear Technology contributes $1 to $1.50 of the handset's chip content.
Other suppliers to the iPhone include Infineon, Triquint, Skyworks, Cambridge Silicon Radio, Samsung, and Toshiba, according to the firm.
"Apple is a proxy for broader consumer demand; iPhone cuts a negative global demand signal," Berger and Pikover said. "… This is a negative signal for global demand, in our view."
Apple did not return requests for comment from Electronic News.
