John Paczkowski

Recent Posts by John Paczkowski

February the Cruelest Month for Apple Supply Chain

For Apple’s component supply chain, February is typically a sluggish month, but this past February was quite a bit worse than usual.

Sales data for a group of component suppliers that generate more than half of their revenue from Apple fell significantly during the month of February, says Topeka Capital Markets analyst Brian White, a foreboding sign for the iPhone maker. White says that his Apple Monitor, a metric that tracks key Apple suppliers, declined 31 percent sequentially over the month. That’s nearly four times the 8 percent dip it typically posts for the period. And even accounting for wildcards, like Chinese New Year, the numbers are bad.

“Since the timing of Chinese New Year can negatively impact sales in February, we also calculated the average February performance when excluding a January Chinese New Year, which equates to down 15 percent,” White explains. “Either way, the Apple Monitor came up short and delivered the worst February we have on record.”

Potentially ominous news for Apple — certainly a metric on which to keep an eye. That said, it’s also one that should be assessed while keeping a few important caveats in mind.

The first: This past February was lousy for the entire consumer electronics supply chain. White notes that every single one of his component monitors posted poor metrics for the month, with four of them turning in the worst or second-worst February on record. So Apple’s not the only company here with potentially concerning supply chain markers.

The second: As Apple CEO Tim Cook reminded us during the company’s first-quarter earnings call. “I would suggest it’s good to question the accuracy of any kind of rumor about build plans,” Cook said. “I would also stress that even if a particular data point were factual it would be impossible to accurately interpret what it meant for our overall business, because the supply chain is very complex and we obviously have multiple sources for things. Yields might vary. Supply performance can vary. … There’s a long list of things that would make any single data point not a great proxy for what’s really going on.”

In other words, a single peek at Apple’s supply chain is just that: A peek. And it may not be a good indicator of the overall picture.

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