[calicocat2010]

CNET Mobile - News

Without Apple, 'supply chain' shrinking, says analyst
by Brooke Crothers May 21, 2012

Apple is so important to the group of companies that build tech-related electronics products that without Apple there would be negative growth, according to Citibank.

The tech electronics supply chain is barely showing year-to-year growth and would be in the red if it wasn't for Apple, according to a research note today from Citibank analyst Jim Suva.

The supply chain is an amorphous collection of manufacturers, many located in Asia.

In a subheading titled "Ex-Apple, the Tech Supply Chain is Still Not Growing Y/Y," Citibank said Apple is the linchpin for growth.

"Projected annual sales growth in the supply chain has slowed significantly and is expected to be +1.5% y/y in June, well below the 5-year and 10-year averages of +4.2% y/y and +6.8% y/y, respectively," Citi's Suva wrote.

He continued. "Year over year, Apple on a dollars basis is expected to [be] outgrowing overall tech supply chain in the June quarter or, in other words, without Apple the supply chain is actually shrinking."

Citibank breaks down the supply chain into "upstream suppliers" like semiconductor chip suppliers, "hubs," e.g., distributors, and "downstream vendors" such as wireless equipment and PC hardware suppliers.

Products like the third-generation iPad keep the supply chain humming. When reporting second quarter financial results in April, Apple said it sold 11.8 million iPads, a 151 percent unit increase over the year-ago quarter.

[morlock_man]

This is Tim Cook's doing.

He's no Steve Jobs at electronics, but apparently he's a production and supply chain management wizard.

Still, this isn't really 'Blackberry News & Rumors' worthy. Should be moved to the appropriate forum.

[_StephenBB81]

SO the assumption is that if there was no Apple, No one would buy other products and they would just do without ?

thats what I am getting from this Article,
No other Manufacturers would pick up the slack in terms of increased volumes, and those other manufacturers being smaller orders wouldn't increase the margins in the supply chain?

What a Bloody stupid Article!

[Superfly_FR]

SO the assumption is that if there was no Apple, No one would buy other products and they would just do without ?

thats what I am getting from this Article,
No other Manufacturers would pick up the slack in terms of increased volumes, and those other manufacturers being smaller orders wouldn't increase the margins in the supply chain?

What a Bloody stupid Article!

+1 K. just.stupid.
"Nature abhors a vacuum"

[Sith_Apprentice]

Without Apple smartphones would not be where they are today that's true, but that doesn't mean people wouldn't be purchasing other phones. Tablets again, they would be different and netbooks might have taken off more. Its impossible to predict what would happen if you remove a key player in the market.

[_StephenBB81]

Without Apple smartphones would not be where they are today that's true, but that doesn't mean people wouldn't be purchasing other phones. Tablets again, they would be different and netbooks might have taken off more. Its impossible to predict what would happen if you remove a key player in the market.

Yes if it wasn't for Apple in the past,

But Apple existing into the future should have marginal impact on the supply chain, the market now has a taste for the product, and people will continue to buy products with our without Apples involvement.

[Sith_Apprentice]

The interesting thing is, if Apple increases the supply chain that much, in order for Y/Y growth there would have to be an even larger increase (in terms of units not percentage) to show. As you keep raising the bar it becomes harder to raise.

So if/when this Apple bubble bursts (market being saturated), the supply chain itself will shrink Y/Y because of Apple.

[Superfly_FR]

Yes if it wasn't for Apple in the past,

But Apple existing into the future should have marginal impact on the supply chain, the market now has a taste for the product, and people will continue to buy products with our without Apples involvement.

add the fact that if apple should "vanish", I'll bet some will buy cheap patents immediately ...
This article is pure fiction, no : intellectual ma5turbation like in "when you cut the legs of a grasshopper, it can't jump. Conclusion : it makes it deaf"

[glamrlama]

Nice selective (and useless) reporting. However if other companies were to vanish somehow the "supply chain" would be growing?

Raise you hand if you think Apple are the inventors of tech electronics?

Slightly off topic but:

I have started using a word substitution for the term "analyst". Whenever I see the word "analyst" in a blog I substitute the words " with internet access". Works pretty well.

[glamrlama]

double post

[morlock_man]

Another way to look at it is that Apple's profit margins are so overinflated they get by on charging significantly more than the products are worth by artificially limiting supply.

If the supply chain were to grow too quickly, the price of components and fully assembled devices would spiral downwards.

Apple makes it's bread and butter on their high prices and people willing to pay them, so wizards like Tim Cook streamline the production and minimize the supply to maximize their worth in the marketplace.

In a sense, it has a very negative effect on the marketplace as it limits the growth possible and ensures that recent technological advances are only available to a limited market that can afford to pay the retail + branded premium prices.

It's kind of like what De Beers does with diamonds, but the enforced labour camps are in China instead of Africa.