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Apple Supply Chain
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JAC Mobile
- [ Ignore ]
All of my prayers for the people of Japan.
Words to express the conflict i feel for studying the impact on the supply of product for Apple is hard to describe, however it is my responsibility to analyze the factors that may have a significant impact on the upcoming earnings and thus drive the stock price. I appologize to anyone who may be offended by the discussion of this subject.
The amount of information is not great, but i feel this will be an important stock price driver for the next few months.
Any input that you may have as to whether Apple will have the supplies needed to meet the guidance is appreciated.
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JAC Mobile
- [ Ignore ]
The following article provides an analysis of how Apple?s Supply Chain may be impacted by the Earthquake.
http://www.zdnet.com/blog/apple/how-will-japan-earthquake-affect-apples-ipad-supply-chain/9763
A few highlights from the article.
“Apple NAND suppliers are not all in Japan. According to iSuppli, Apple is supplied by Toshiba and Samsung as well as other vendors. However, Apple primarily purchases flash memory from ?top flight? vendors, such as Samsung and Toshiba. Most of Apple?s DRAM comes from Korean vendors and would be unaffected.”
as well as:
“So here?s my guesstimates: Apple has locked in prices for flash memory components. It must have a reasonable supply already in the chain. And with $43 billion in cash, the company can get what it needs. But likely it won?t have to stretch far.
As one of the world?s biggest customers for the technology, it will get its supply before the smaller buyers ? even if those ?smaller? companies are Hewlett Packard, Motorola and even Samsung. In the manufacturing business, Japanese manufacturing giants and the arms of Korean chaebol conglomerates can?t play in-house favorites. The biggest customer gets first choice.
That means that everyone else, big and small will feel the pinch more than Apple. Way more”
On CNBC this morning they mentino that Apple gets a great deal of chips from Hitachi - and that they are shut down.
Flash, LCD panels - what other components do we need to analyze?
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Factors of apple hardware production: demand, electrical supply, factory stability, workers availability, supply of raw materials and transportation of the supply.
Demand is the obvious one. High.
Transportation of supply ? Don’t know.
Raw materials and workers availability is possibly the least important.
Electrical supply. Touchy. -
DawnTreader
- [ Ignore ]
Keep your wits about you, lads. If there’s any supply disruption in any way and of any kind it’s due to the earthquake damage and less to the ongoing challenges of radiation leaks. Transportation challenges in an out of Japan will be temporary and due only to major caution over the radiation seeping into the atmosphere. By all accounts Japanese authorities are working diligently and responsibly to maintain order, care for the people directly impacted by the trifold disasters (earthquake, tsunami and nuclear plant hazards).
The images are horrific, the suffering is real yet Japan as a government and as a people is responding well under the most challenging of circumstances.
Any disruptions at all to Apple’s supply chain will most likely be minor and temporary. This is a series of events that have caused a horrific loss of life and displaced one-half million people. The wellbeing of those directly impacted by these events is the more pressing concern.
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Factors of apple hardware production: demand, electrical supply, factory stability, workers availability, supply of raw materials and transportation of the supply.
Demand is the obvious one. High.
Transportation of supply ? Don’t know.
Raw materials and workers availability is possibly the least important.
Electrical supply. Touchy.The only raw material production which might impact is the production of pure silicon
Supply of polysilicon facing shortage as Japan implements power brownout
Nuying Huang, Taipei; Willie Teng, DIGITIMES [Tuesday 15 March 2011]With the Japan government implementing power brownout policy on March 14, Japan-based polycrystalline silicon (poly-Si) and silicon wafer makers may be forced to stop their production for one month. Since most of these capacities are supplied to the semiconductor industry and poly-Si capacity in Europe and the US are all booked, the related semiconductor players may soon be out of poly-Si supply, according to industry sources.
The power brownout will also disrupt manufacturers outside of northeast Japan, especially upstream material production such as poly-Si, which is a time-intensive process, and ingot production is the same.
Japan-based poly-Si supplier M.Setek, located in the Sendai region, mostly produces for the solar sector. Tokuyamoa, Mitsubishi Chemicals, Sumitomo Chemical and Shin-Etsu provide materials for the semiconductor sector. Shin-Etsu reportedly has already halted production, and the other chemical engineering companies should see decreased output.
With other international material supplies such as Hemlock, REC, Wacker and MEMC all running at full capacity, companies that rely on Japan-based suppliers for materials will have a difficult time transferring orders.
As for wafer production, the power brownout will have the same impact on manufacturing lines. Northeast Japan is an important area for the semiconductor supply chain. Wafer demand within Japan in the near term is expected to decrease, but semiconductor companies outside of Japan could see more business due to order transfers.
I believe Samsung produces their own wafers via a joint venture with Siltronic
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JAC Mobile
- [ Ignore ]
Apple may face supply problems for iPad 2 - report 03/17 01:56 PM
SAN FRANCISCO (MarketWatch)—Apple Inc. (AAPL:$334.64,00$4.63,001.40%) may face supply problems stemming from the disasterous earthquake and tsunami in Japan for its recently launched iPad 2, according to a report from market research firm iSuppli on Thursday. In a note issued Thursday afternoon, iSuppli wrote that the iPad 2 used at least five parts from Japanese suppliers, including two types of memory chips, an electronic compass, the main battery for the device and the overlay glass for the touch screen. “While some of these suppliers reported that their facilities were undamaged, delivery of components from all of these companies is likely to be impacted at least to some degree by logistical issues now plaguing most Japanese industries in the quake zone,” the report read. Apple (AAPL:$334.64,00$4.63,001.40%) put the iPad 2 on sale in the U.S. last Friday and plans to launch the device in 25 other countries on March 25.
I pulled this directly from my Fidelity alert - no additional information. -
capablanca
- [ Ignore ]
The following is taken from the Asahi Glass website. It is believed by some that they are the supplier for iPad glass. Perhaps some of the engineering/technical members can shed some light on this for us marketing/financial types.
Outlook and other situations concerning shipments
(1) Glass
Until the operations of AGC Kashima plant resume, AGC will allocate existing inventories and shipments from other AGC Group?s plants in and outside the country and make the utmost effort to prevent a supply shortage of architectural glass.
(2) Electronics
The impacts of the earthquakes and tsunamis have been limited to small/mid-sized LCD glass substrates, and it is considered that impacts on AGC Group?s overall flat panel display (FPD) business will be limited.
(3) Chemicals
The loading berth at AGC Kashima plant has been damaged and it is not clear when production will resume. Regarding AGC Chiba plant, AGC is in the process of confirming the status of the facilities, but the restart of the plant operations from the annual shutdown is expected to be delayed. -
There are 2 other port areas in the “near” area from Kashima: Choshi / Hasaki and near Mito. Freighter capacity ? unknown these days.
Otherwise, the trains do run from Kashima to Narita, Chiba, Tokyo. Passenger trains predominantly, but freight trains about 1-2 times a day in each direction.
Trains also could go to Choshi, but would take rescheduling of other trains.
I used to live 100 yards from that train line as the crow flies.
Nearest airports are: Narita and, far less conveniently, central Ibaraki Prefecture.
[ Edited: 18 March 2011 12:21 AM by Tetrachloride ] -
Asahi Glass http://www.agc.com/english/news/2011/0314e.pdf
(3) AGC Display Glass Yonezawa (Yonezawa, Yamagata prefecture)
There is no critical damage to the building facilities of AGC Display Glass Yonezawa, which processes small/mid-sized LCD glass substrates, and production operations are resuming accordingly. Meanwhile, among the company?s outsourcers what handle a part of its processing operations, some building facilities have been severely damaged, and urgent restoration work is underway.
Required reading if Asahi is an Apple supplier -
The key paragraph
The impacts of the earthquakes and tsunamis have been limited to small/mid-sized LCD glass substrates, and it is considered that impacts on AGC Group?s overall flat panel display (FPD) business will be limited.
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Understanding that this is the Apple finance board, but many industries will be affected as Japanese components are in may products. Automobile parts, home appliance, a lot of things contain Japanese electronics.
As mentioned in previous comments in this thread the shortages will be temporary. I have a very good friend who is a freight forwarder and customs broker who tells me almost all of Japan’s seaports are open and operating, air freight is resuming.
In the meantime Japan is still in rescue mode and dealing with that power plant, I can wait for my consumer goods.
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JAC Mobile
- [ Ignore ]
Component supply of iPad 2 still about 2-3 weeks; Foxconn to activate backup measures
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Ninelu Tu and Yen-Shyang Hwang, Taipei; Joseph Tsai, DIGITIMES [Friday 18 March 2011]
As there are rumors that Apple will soon be out of product supplies because Japan’s earthquake has caused shortages of components are circulating in the IT industry, Foxconn Electronics (Hon Hai Precision Industry), which declined to comment on specific clients, reemphasized that the company will not see any component shortages in the short term, and said the company has already prepared backup suppliers. Even if component supplies do fall into shortage, Foxconn’s capability of securing supply resources is still much better than its competitors, the company added. Market watchers also pointed out that Foxconn should still have about 2-3 weeks of component inventory left as IT players normally keep a certain level of inventory on hand for safety.Since Apple’s stock was recently downgraded because of Foxconn’s declining revenues, while there are rumor that Foxconn will see component shortages soon have been spreading around, Foxconn has been investigating the inventory levels of its component supply subsidiaries and reporting back to its clients; meanwhile, the company has also started activating its backup plans, the market watchers noted.
The market watchers pointed out that if Japan’s power brownout policy and radiation pollution can be resolved within a month, allowing affected plants to start operating, the problem should not be serious; however, if the problems get worse, every industry worldwide will be involved. Therefore, several makers have already started up their backup plans including increasing their orders to second-tier suppliers and finding other supply sources and replacement components.
Sources from component makers also pointed out that Japan’s earthquake will not be a problem for a single player, and over-concern is not necessary, since the upstream supply chain will eventually find replacement solutions.
http://www.digitimes.com/news/a20110318PD208.html
According to this posting, there should not be a supply issue. -
danthemason
- [ Ignore ]
http://www.nytimes.com/2011/03/20/business/20supply.html?pagewanted=1&_r=1&partner=yahoofinance
Looks like “Just in case” trumps “Just in time”
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http://www.nytimes.com/2011/03/20/business/20supply.html?pagewanted=1&_r=1&partner=yahoofinance
Looks like “Just in case” trumps “Just in time”
Warehousing cost and obsolescence is expensive, so there is a limit to “just in case”.
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danthemason
- [ Ignore ]
It could be tough if that 6 week supply buffer isn’t refilled. The only tablet option will be the unsold Xoom inventory.
As to which is cheaper, warehouse or just in time. With the international supply chain and Murphy’s law, 6 weeks is just in time. But it is probably moot any way because the suppliers were going flat out to supply demand.
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Couple supply updates via EE Times
Toshiba hopes to restore some level of operation at its wafer fab in Kitakami, Iwate, by the end of March, the company said in a status update on Friday (March 18). However, the company said it will only be able to start test operations after recovery of its power supply. The company has a partial recovery of power at the site as of March 13.
Toshiba added that it is concerned about the short-term impact of logistics on all its semiconductor facilities.
The NAND flash memory fabs at Yokkaichi are operating normally, Toshiba said, but it added that there are supply chain concerns about operations there.
VLSI Quake analysis
‘‘Moreover, most of Japan?s semiconductor production was not affected by the Tsunami either. The biggest issues currently affecting Japan?s semiconductor production are: power and transportation,’’ he said. ‘‘If a fab is subject to the 3-hour rolling blackouts, it can?t run. Moreover, Japan?s rail systems run on electricity and their scheduling systems didn?t incorporate plans for such an event.’‘
What is the overall impact to the IC industry? ‘‘The bottom line is that we believe the effect on semiconductor revenues for this year will be nil. There will be margin pressures, as limited supplies of raw materials drive prices up. But that is also being driven by growth and inflation in Asia,’’ he added.
