The Apple bears are singing songs of victory these days, with recent reports that Apple recently reduced the number of iPhone 5 displays it wants delivered. The presumable take-away is that iPhone 5 demand is on the decline, Apple’s days are numbered, and let’s all greet our new Samsung overlords with open arms.
But not so fast, folks.
The truth is that no one knows the full story behind Apple’s reduction in display orders. Indeed, some analysts are exclaiming that there’s nothing to worry about, with some even theorizing that the reduction in screen orders is the result of improving yields on the extraordinarily hard to manufacture iPhone 5 LCD displays.
To that end, JP Morgan analyst Mark Moskowitz recently noted:
In our view, the potential order cuts are a direct result of manufacturing yields improving following the fast-and-furious product roll-outs of the iPhone 5 as well as new iPads and Macs.
Echoing that, Sterne Agee analyst Shaw Wu wrote that Apple’s reduced demand for displays is a function of Apple’s component suppliers becoming more skilled and efficient at manufacturing them.
And if you recall, yields on the iPhone display were very low when the iPhone 5 first launched.
Network World notes:
The iPhone 5 utilizes in-cell touchscreen displays which provide for a thinner screen as the touch sensors are embedded onto the LCD itself. The iPhone 5 was the first time Apple utilized in-cell touchscreen technology and manufacturing said screens quickly proved to be “painstaking” for Apple’s partners. Of course, with any new technology comes some growing pains, especially when making something complex and thin even thinner.
And highlighting the serious nature of the low yields on the iPhone 5 display, you might recall that Apple reportedly bumped up trial production of the iPhone 5S precisely due to the low yields experienced when manufacturing the iPhone 5 displays.
It seems strange that the iPhone 5 – Apple’s most successful product launch to date – would suddenly experience a lowering of demand, seemingly out of nowhere. While Apple, by all accounts, did cut back on its display orders, there are a bevy of reasons as to why it chose to do so.
When Apple releases its earnings in a few days and issues its guidance for the next quarter, we’ll hopefully all have a better grasp as to the state of actual iPhone 5 demand.