Apple Inc. (NASDAQ:AAPL) will be facing one of the most challenging times in its history, following its launch of iPhone 5, which the company expects to roll out in 240 carriers, and 100 countries by the end of 2012. Analysts have predicted incremental sales from the current quarter, through F2Q13, which means that the company would need to produce more units in 2013, as compared to 2012.
The current statistics indicate that the company is already facing shortfalls for the new iPhone 5, as demand continues to garner momentum. Sadly, for Apple Inc. (NASDAQ:AAPL), this predicament is not being aided by the fact that Samsung Electronics Co., Ltd. (LON:BC94) plans to slash its capex by 50% in 2013, according to what Equity Research firm Stifel Nicolaus, has labelled as a rumor.
Nonetheless, prudentially looking at things, Apple Inc. (NASDAQ:AAPL) must assume the worst, that is, its rival and prime supplier of the NAND, and DRAM memory chips, is about to cut its capital expenditure by 50%. These are the same chips used in iPhone 5, along with other iPhone devices, and considering the overwhelming demand for the new iPhone 5, Apple could find itself struggling to break through the bottleneck.
The bottom line is, Apple Inc. (NASDAQ:AAPL) must identify alternatives, sooner rather than later, in readiness for what could otherwise, topple all the analysts’ estimates if indeed, the Korean based electronics semiconductor supplier went on to actualize the rumor. So, what exactly is Apple doing about this? Any plans ahead? Well, the answer can be traced in one of our previous articles, whereby we featured Apple Inc. (NASDAQ:AAPL) cutting down Samsung electronics from its list of suppliers.
Additionally, Apple Inc. (NASDAQ:AAPL) went on to extend the business to other vendors from the region, including Japan. Stifel Nicolaus notes that Apple could still partially cover the gap created by the exit of Samsung, by increasing the order quantity from other suppliers, such as TSMC or GlobalFoundries, or memory suppliers, and Hynix and Micron/Elpida, who are getting an increasing percentage of Apple’s business.
However, the position is very puzzling for the iPhone maker, as the question that still begs to be answered, is whether the other suppliers will be able to meet its robust demand. Over the years, material supply for manufacture of iDevices has troubled Apple Inc. (NASDAQ:AAPL), but the current scenario, however navigable, is proving to be the challenge of a lifetime.
We recently saw one of the measures that Apple Inc. (NASDAQ:AAPL) took, following the skyrocketing demand for the new iPhone 5. The company sought to postpone some deliveries to various countries, in a bid to deal with short-term shortfalls. While this was the most viable option at the time, it cannot be applied for the future, larger demand. This is why the company must ensure that the two major semiconductor components are available adequately.
In conclusion, Apple Inc. (NASDAQ:AAPL) stands at the middle of two constraints, shortage in supply of key device components, and an overwhelming demand for the device. If the company can finally solve this puzzle, then the end result would be a healthy 2013, at least up to the end of F2Q.
Nonetheless, the company can count on several semiconductor companies, that can supply it with the components, as the industry is expected to grow significantly in 2013, according to Stifel Nicolaus.
At the time of this writing, Apple Inc. (NASDAQ:AAPL) stock was trading at $696.38 per share, down $5.72, or 0.81%, from yesterday’s close.
