Apple Could Raise Component Output, as Supply Chain Suggests Company Will See Better Than Expected Holiday Season

Omar Sohail
Posted Oct 6, 2016
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An Apple supplier by the name of Dialog Semiconductor has pre-announced positive September quarter results, most likely thanks to the release of iPhone 7 and iPhone 7 Plus, and has suggested that the tech giant could raise component orders in order to see demand well sated. Though the demand will definitely have positive impacts on Apple, raising component orders will also allow suppliers to report higher revenues for their respective quarters.

Dialog Semiconductor Has Raised Revenue Expectations by Quite a Large Margin – Apple Might Be Swayed to Increase Component Orders to Keep up With Swelling Demand

According to sources close to the matter, Dialog has raised revenue expectations for the past quarter to approximately $345 million. This is up 13 percent from previous estimates, which hovered in the range $290 million to $320 million, which could indicate that strong demand for the iPhone 7 and iPhone 7 Plus is still at large, although Dialog didn’t dive into the specifics of the report. However, I understand the suppliers concern for suggesting Apple that it will have better than expected demand later down the road.

Dialog stated that the revenue increase is in part the result of mobile systems orders being pulled forward into the third quarter to accommodate China’s National Day holiday on October 1. Keep in mind that Apple accounts for 75 to 80 percent of Dialog’s mobile systems revenue. According to RBC Capital Markets analyst Amit Daryanani, it builds iPhone approximately 60 days out, meaning the pulled-in orders are likely related to the December quarter.

In a recent RBC survey, around 46 percent of individuals have said that they want to buy a 5.5-inch iPhone, and that is up from 38 percent a year ago. Furthermore, more than half of the consumers intend to purchase the mid-tier 128GB storage version, seeing as how these models provide the best possible storage-to-price ratio.

In another poll, around 17 percent of consumers intend to purchase an Apple Watch compared to 13 percent last year, and Apple Pay is making improvements with usage rates hovering at 24 percent, up from 16 percent just after launch. I believe part of why Apple Pay is being used at brick and mortar locations more is because making payments through NFC is much safer compared to using payment cards, although it will take some time for consumers to make the switch.

That being said, Apple could be forced to increase component orders, since it would not want to miss out on the strong demand being laid out for the iPhone 7 and iPhone 7 Plus. What are your thoughts on the matter? Tell us in the comments right away.

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