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.