Apple cuts iPhone 3G build plan; Suppliers to take a hit

Apple cuts iPhone 3G build plan; Suppliers to take a hit

Summary: Apple reportedly plans to build 14 million to 15 million iPhone 3Gs from a previous target of 18 million for 2008, according to a report from Pacific Crest.Citing "supply chain channel checks" Apple's is cutting its iPhone 3G buildout.

SHARE:

Apple reportedly plans to build 14 million to 15 million iPhone 3Gs from a previous target of 18 million for 2008, according to a report from Pacific Crest.

Citing "supply chain channel checks" Apple's is cutting its iPhone 3G buildout. However, analysts reckon that the lower build-out plan won't hurt Apple. However, suppliers that make the guts of the iPhone may take a hit.

The report has a few interesting data points. Among them:

  • Pacific Crest found that AT&T stores are seeing inventory drawdowns of 8 GB iPhones through late August and mid-September. The upshot: "The popularity of the 8 GB model reinforces our concern that smartphone demand has shifted to a lower price point. We are also concerned that if Apple chooses to refresh its lineup with a 16 GB model at $199 and a 32 GB model at $299, this could put additional price pressure on the handset industry and, by extension, the component suppliers."
  • There is a caveat to that aforementioned point. Pacific Crest analyst Adam Hargreaves said in a report that the shortages of 8 GB iPhones could be an intentional drawdown as Apple plots a lineup with more capacity.
  • Suppliers are expected to take a hit. Pacific Crest cut revenue estimates for Skyworks Solutions and Triquint Semiconductor--two companies that make power amplifiers for the iPhone 3G. Linear Technology, On Semiconductor and National Semiconductor could also face some turbulence on Apple's move.
  • The shift to lower-priced iPhones will push pricing down for other handsets. We saw some of this worry on RIM's conference call. RIM is aggressively going after the consumer market and launching new models. RIM also noted that it can't pass on higher costs to customers. This ripple effect may impact Marvel and Broadcom, according to Pacific Crest.
  • NAND memory prices will continue to fall. Apple alone wasn't able to cure an inventory glut of memory and its cuts to iPhone builds certainly won't help. Simply put, there's more pain ahead for Sandisk and Micron Technology.

Add it up and it appears that when Apple burps the whole supply chain takes notice.

Topics: Software, Apple, Enterprise Software, Hardware, iPhone, Mobility, Networking, Wi-Fi

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

39 comments
Log in or register to join the discussion
  • or... iPhone 3G sales 20% down on target

    Dress it up however you want... bottom line is Apple aren't selling as many iPhone 3G's as they thought they would.

    Unless... they're recycling 3-4 million that were returned ;-)
    iTeaBoy
  • It looks like Apple drank a bit too much of its own kool-aid!!!

    Couldn't happen to a more evil company. Oops, did I just violate YAANDA (yet another Apple NDA)? ;)
    NonZealot
    • Back again?

      Always to be found around here bashing Apple. He's just upset that Microsoft is becoming increasingly irrelevant. (Its value as a company peaked NINE years ago!)

      Not to mention that Windows Mobile is going down the tubes since developers are jumping ship to the iPhone and Android. And how does Microsoft respond? They DELAY Windows Mobile 7.0 once again. But, of course, nobody cares... :)
      rynning
      • NonZealot does. [nt]

        [nt]
        olePigeon
      • windows mobile is going down the tubes?

        [i]Not to mention that Windows Mobile is going down the tubes since developers are jumping ship to the iPhone and Android[/i]
        (I love copy and paste with mobile devices!)

        considering there are 2 windows mobile devices sold for every os x device, I question your use of the phrase "going down the tubes". get back to me when apple catches up to Microsoft and then we'll talk. until then, Microsoft is kicking apple butt in the mobile market. :)

        PS there are 100+ windows mobile applications for every iphone app so again, let me know when apple catches up and we can talk about how developers are abandoning Microsoft.
        NonZealot
        • Re-post of Re-post: Numbers, Numbers....Zzzzzzzzzzzzzzzzzzzzzz

          WOW, 2 posts pulled. HaHaHaHa. You are something. Anyway....The post this time with no reason to pull. Unless ZDNet is discriminating against my posting, in which case I would like to be notified so that I can get my lawyers working on it. Now for the re-post of the re-post.

          There is only ONE phone running OS X and 500 phones running Windows Mobile.

          Let me know when Windows Mobile doesn't stink and you can take some criticism.

          NOTHING TO REMOVE THERE ZDNet!!!!!!!!!!!!!!!!!!

          For clarity's sake the word you presumable removed my last post for was an acronym for "window, icon, menu, pointer" or "windows, icons, mice and pointers, or wise, idol, menu, persona." Nothing to pull on that!
          GoneFromZDnet
        • Copy/Paste

          [i]I love copy and paste with mobile devices[/i]

          nice. lol ;)
          tikigawd
        • are you stoned

          The mobile pc smartphone will do circles around the iphone, I know I can operate servers anywhere pc anywhere and use office excel ect on my smartphone, and it will do a nice slideshow like my iphone 3g, which after using the htc mobile, has now become a paperweight. I dunno I don't get it maybe, but the iphone has social apps and junk that i don't need for work. but if it works for you and your in justin's club of socializing get the iphone, if you have a real job you need the mobile pc, which won't sink nor will iphones, we have macs and pc's neither will ever go away so just use what works for you. being iphone bias or mobile pc bias means nothing, what your needs are should determine whats best for you not some opinion of by some idiot like me telling you which will flop your terflop faster. make a decision for yourself and if it doesn't work like my 3g iphone doessn't get the smartphone.
          rayman125
      • Oh God...

        ...please never post anything about market value again. It's just embarrassing.
        Sleeper Service
  • They're still selling well...

    ...just not the stupidly high estimates some analysts - and, let's be honest, after the complete balls those muppets have made of the financial markets you'd be a fool to listen to a damn thing they said - came out with.

    However, every device, particularly in a market as fast and as brutal as the cellphone market, has a shelf life and the 3G is already reaching the end of its.

    Bottom line is it's a nice device and it's sold really well but then so did the N95 and the RAZR and the StarTac.
    Sleeper Service
    • Just not as well as Apple thought they would

      The stupidly high estimates you refer to are Apples own... not financial or economic analysts
      iTeaBoy
      • Nope...

        ...I was referring to Gene 'Comedy' Munster amongst others.
        Sleeper Service
  • RE: Apple cuts iPhone 3G build plan; Suppliers to take a hit

    On the wake of RIM's plunge, this is nothing but
    FUD being spread by CNET's garbage reporters.
    pjtmgt@...
    • Feel Sorry for You

      Looks like you're trying to convince yourself to hold on to those AAPL stocks because you sound like you're wetting your pants right now posting over and over again the same stuff. Oh wait, maybe you're not old enough to buy stocks and just wet your pants as a child would do.
      Intosh
  • RE: Apple cuts iPhone 3G build plan; Suppliers to take a hit

    On the wake of RIM's dramatic plunge, this is nothing more than FUD being spread by CNET's garage band reporters.
    pjtmgt@...
    • Make up your mind

      Are they Garbage Reporters or Garage Band reporters?

      The first post was plenty.

      Dah, dah, daaaah...
      Timpraetor
  • All FUD by CNET: Don't Listen: Bye RIM

    See subject line.
    pjtmgt@...
    • Sure, I'll take advice...

      ...from someone who's dumb enough to post the same thing three times.

      Thanks for playing, kid. Come back when you actually understand the tech markets.
      Sleeper Service
      • Oh, well let's all say good bye RIM

        We'll see who's the tech expert in three to four weeks. CNET, like the other PC lemmons, just like to marginalize everthing Apple does out of trying to keep the PC users happy about the junk they're using.
        pjtmgt@...
        • Apple marginalize themselves

          The Mac is a PC too. You've been brainwashed by those Mac commercials.
          Intosh