Analysts Dispute Supply Chain Conclusions of iPad Production Cuts

JPMorgan analysts have recently predicted that Apple slashed its fourth quarter iPad production plans by 25%, suggesting significant price cut. But The Wall Street Journal believes that such argument is insufficient to make these predictions. Other analysts not that Apple appears to have actually accelerated production ahead of the holiday shopping season. Sources also indicate that Apple plans to begin production of the iPad 3 at the end of the fourth quarter or early in 2012, so accelerating production now, the company tries to ease that transition.

We believe chatter regarding iPad production cuts are misleading – we have seen pull-ins, not cuts. We have noted recent comments by competitors discussing iPad production cuts for 4Q. Our recently published AAPL supply-chain checks noted a sequential decline in 4Q iPad builds from 17 mln-19 mln units in 3Q to 11 mln-13 mln units in 4Q. However, the 4Q sequential decline was accompanied by an increase in 3Q builds, leading us to conclude that production was likely pulled-in from 4Q to 3Q.

Some analysts suggest that the fourth quarter production cuts may be connected with shifting some production to Brazil by the end of the year.