Entering Black Friday we observed lead times at Apple for ten products in six countries that suggested the gap between demand and supply is slightly wider than what we would have anticipated given company commentary on the September earnings call. We revisited the lead times on Cyber Monday and found that while there were slight changes, the supply environment remains tight. What’s most important is demand for both Apple’s newest and previous generation products is strong, and to the extent the December quarter is negatively impacted from greater-than-expected supply chain bottlenecks, the March quarter will have a corresponding positive impact.
Promotions mirror 2020
Apple discounts a handful of its products once a year, from Black Friday through Cyber Monday. This year the level of promotions is similar to 2020 levels, with about 15 products eligible for an Apple in-store credit with purchases. Not surprisingly, Apple is not offering any incentives for the products that are most in demand, including Watch Series 7 and iPad Mini.
Lead times in six countries continue to show tight supply
- Typical lead times for new Apple products going into Cyber Monday are on average about 10 days.
- Apple’s guidance calling for an $8B supply chain headwind in December would imply lead times entering Cyber Monday should be an average of 16 days.
- Today, Apple is quoting an average of 18 days for seven new Apple product SKUs in 6 countries. That is a slight improvement from 20 days we observed last week.
- New iPads remain in the tightest supply, with new model lead times averaging 39 days. This is a slight improvement from 40 days we observed last week. iPad accounts for about 9% of the December quarter revenue.
- iPhones 13 are running with an average delivery time of 8 days. That is a slight improvement from 9 days we observed last week. iPhone accounts for just under 60% of the December quarter revenue.
- The new Watch showed the biggest improvement in supply and is running with an average delivery time of 13 days, down from 24 days last week. Watch accounts for just over 5% of the December quarter revenue.
- Average lead times for previous generation products were 8 days, compared to typical same-day availability.
Three takeaways
- As expected, Apple can’t keep up with demand. Most of the lost demand in December will be captured in March.
- If that 4-day lead time gap continues for the balance of the quarter, it would increase the supply chain effect in December to about $10B, compared to guidance of $8B. The $2B delta is just under 2% of the Street’s $117B holiday quarter revenue estimate.
- We caution, it’s two days of data points that will evolve throughout the quarter.