Yesterday, reports surfaced that the iPhone 5 was experiencing weak demand, and as a result Apple was reducing their component orders. Given that the rumor originated from The Wall Street Journal, it was taken seriously by most - The WSJ has a fantastic track record when it comes to Apple rumors and information. That report sent Apple’s stock price tumbling, and it continued that fall today.
But not all is lost, or at least that’s what certain analysts have to say. While Apple may have cut the number of screens it has ordered from suppliers, the reasoning behind that move may be more nuanced than a decrease in demand. Instead of weak demand, analyst Shaw Wu believes that this cut comes as a result of an increase in the yield of each manufacturing batch.
Each batch of a component has an expected number of duds that simply aren’t up to the preferred standards. This number of duds is taken in to account, but that number often decreases as manufacturing processes become more stable and routine over time. The longer a certain component is in mass production, the easier (and therefore cheaper) it becomes to produce it. This phenomenon would explain why Apple has cut its orders of screens.
Take this with a grain of salt: this is an analyst. However, this would be a logical theory, especially given the apparent interest in Apple’s latest device and the signs of strong demand that are still present.