Analyst: iPhone Supplies Dipping Ahead of Fall Refresh

Apple is scaling back iPhone 4S production ahead of a fall product refresh, according to Sterne Agee analyst Shaw Wu. That could lead to a 25 percent reduction in sales compared to the previous quarter, and come in under analyst expectations.

Shaw Wu lowers iPhone sales estimate“We have picked up from our supplier checks that build plans for current iPhones have been reduced significantly. We are hearing a magnitude of down 20%-25% Q/Q from 35.1 million units in the March quarter,” Mr. Wu said. “From our understanding, the reason for the reduction is not demand related but rather due to the upcoming 6th generation iPhone refresh likely in the September-October timeframe. It appears that Apple is opting to be conservative with its suppliers to factor in a potential two-quarter pause ahead of the refresh and also to manage inventory.”

Assuming Mr. Wu’s estimates are right, Apple will ship between 26- and 28-million iPhones during the quarter, coming in below analyst expectations which land between 30- and 31-million units.

While iPhone production may be down, it looks like iPad production is up. Mr. Wu’s checks indicate the Retina Display in the third generation iPad wasn’t available in the quantities Apple had wanted, but that supply restrictions are finally easing thanks to the addition of another supplier.

Mr. Wu is lowering his iPhone sales estimate for the June quarter from 28 million units to 27 million. For the iPad, however, he raised his estimate from 14 million units up to 15 million.

He also raised his fiscal 2012 revenue estimate from US$158 billion up to $159 billion with $46.75 EPS, up from $46.

Mr. Wu has a “Buy” rating and $780 target price for Apple’s stock. Apple is currently trading at $560.66, up 2.44 (0.44%).