Apple Supply Chain Checks Show New Cheaper iPhone, Shuffle, MacBook Coming

Wedbush Morgan analyst Craig Berger recently sent a note to clients highlighting Apple's (AAPL) product pipeline for the coming year. Excerpts follow:

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We have incremental checks into the Apple (AAPL) supply chain. First, we see several new Apple products coming in 1H09. Our contacts see a lower-cost version of the iPhone, possibly in mid 2Q. Apparently, Qualcomm (QCOM) is replacing Infineon (IFX) as the baseband supplier in this device. Some call this device the "iPhone Nano"; whatever one calls it, we believe this device is on its way.

Also, we anticipate a new and smaller version of the iPod Shuffle, possibly in mid 1Q, with chip content largely unchanged.

Finally, we see a cheaper MacBook notebook coming, although we do not believe this PC will qualify as a netbook.

We have some incremental build volume checks. For iPhones, our checks suggest calendar 4Q build volumes were revised downward slightly versus our early December checks, with a partially offsetting increase to 1Q production volumes. We now see 4Q iPhone production down 53% QOQ, worse than last month's check of down 48% QOQ. For 1Q, we now see iPhone production down about 8% QOQ (versus our prior check of –25% QOQ, now off of a lower base of shipments in 4Q). Our calculations suggest end consumers could buy a theoretical maximum of 10 million iPhones in 4Q, including inventory at carriers (2 million units exiting calendar 3Q), at Apple, and at retail partners.

We did not get a full iPod or PC update, but we do have some incremental checks. These data show that the magnitude of recent production cuts is lessening and that order patterns among component suppliers may begin to stabilize (somewhat) versus the past few months.

We think these checks are slightly positive for Apple's PC chip suppliers (INTC, MRVL, LSI, NVDA) and neutral for its iPhone chip suppliers (BRCM, MRVL, LLTC, NSM, TQNT, SWKS). For the stocks, we think risk/reward dynamics are attractive for intermediate-term investors, with the SOX trading at 207. We believe a fundamental bottom may form in 1H09 and that distributors may replenish component inventories sometime this summer, providing an industry catalyst in 2H09. Our preferred longs, in order of preference, are ONNN, MRVL, MSCC, SLAB, IRF, BRCM, FCS, and ATML.

Comments

[bobthenoob:]

Maybe a new Shuffle, the rest will not happen. Doesn't make sense to enter the netbook war with less margin while iPhone/iTouch able to do what pc netbooks can do.

Cheaper iPhone? Cheaper as in $49 instead of $99? You're not going to attract more buyers if the ATT service still cost the same. Anyway, the iPhone is a hit why compete with a cheaper version?

2008 Dec 31 10:23 AM

[bobthenoob:]

oops, "…$149 instead of $199" Well, not completely wrong, they are selling refurb $99 iPhones at ATT.

2008 Dec 31 10:28 AM

[Constable Odo:]

People want $350 netbooks, not $650 ones, OSX or not. These buyers of the cheap netbooks are just want to show they got the cheapest possible mobile computing device. Seemingly, the most bang for the buck. I don't think there's any way Apple can compete against a netbook without lowering prices to netbook territory.

2008 Dec 31 09:10 PM

[sofaking30:]

Didn't the latest quarter conference call state that Apple wanted to steer from focus on netbooks? But they are watching. I believe Steve mentioned that the iPhone was a competitor to it's a "mobile computer" already. Macbooks delivers 30% margins as well as other products. Can netbooks deliver 30% magins for Apple? It'll put Apple in the lower end of their image.

Jan 01 02:04 PM

[realitybytes:]

Aren't you the guy called "The Apple analyst who couldn’t shoot straight" because of your proclivity for being wrong in almost all of your published insights into Apple?
Perhaps a grain of salt is what your missives should be taken with.

Jan 22 09:46 AM