Apple’s Holiday Quarter Supply Chain Impact Is Becoming More Clear

Apple’s Holiday Quarter Supply Chain Impact Is Becoming More Clear

We tracked lead times at Apple for ten products in six countries, from Black Friday to December 21st, and found that supply remained tight throughout the four holiday shopping weeks. We were expecting to see more measurable improvement which leads us to expect that the December quarter supply chain headwind will exceed the company’s $8B estimate. We are now looking for a $10B impact. The $2B delta is just under 2% of the Street’s $118B holiday quarter revenue estimate. We believe two-thirds of the revenue push will be captured by Apple in March 2022.

It’s no surprise that the supply environment remains tight. The demand for both Apple’s newest and previous generation products is strong and, to the extent that the December quarter is negatively impacted from greater-than-expected supply chain bottlenecks, the March quarter will have a proportionately positive impact.

Lead times in six countries showed only slight improvement throughout the holiday shopping season.

  • Typical lead time for new Apple products exiting the holiday shopping period is within the 2-4 day range.
  • We estimate that if the supply chain headwind for the December quarter will come inline with Apple’s guidance of $8B, current lead times could be between 11-13 days for new products.  The incremental 9 days above typical lead time seasonality equates to about $8B in revenue, assuming that 65% of quarterly revenue is generated from new products.
  • Today, Apple is quoting an average of 16 days for seven new Apple product SKUs in 6 countries. That is a slight improvement from 17 days we observed last week, 19 days three weeks ago and 20 days a month ago.
  • New iPads remain in the tightest supply, with new model lead times averaging 42 days. This is an increase from 40 days we observed last week. The iPad accounts for about 9% of the December quarter revenue.
  • The iPhone 13 is running with an average delivery time of 2 days. That is an improvement from 4 days we observed last week and 8 days three weeks ago. The iPhone accounts for just under 60% of the December quarter revenue.
  • The new Watch continued to show the biggest improvement in supply and is now running with an average delivery time of 1 day, down from 5 days last week, 13 days three weeks ago and 23 days a month ago. Watch accounts for just over 5% of the December quarter revenue.

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