Does This Apple Rumor Check Out?


Apple (NAS: AAPL) boasts the finest supply chain in the tech business -- or any business, for that matter.

But even the best isn't always perfect. Cupertino has reportedly ordered up so many laptop systems for a long-rumored summer update that its Asian suppliers have a hard time keeping up.

Taiwanese industry paper Digitimes says that Apple's "upstream supply chain players are reportedly facing labor shortages." Manufacturing plants in China have reportedly seen a shortage of workers for some time, and Apple's big orders seem to have swamped its traditional components suppliers. According to Digitimes' anonymous sources inside the component manufacturing industry, some of Apple's handpicked suppliers are passing the buck to other outsourcing outlets.

This wouldn't be the first time Apple's huge scale has caused problems up and down the ol' supply chain:

  • Audio chip designer Cirrus Logic (NAS: CRUS) ran into production problems on a brand-new Apple-bound chip last year. Cirrus had to bite the bullet and write off $4 million of unusable chips -- but Apple saw no slowdown because Cirrus pushed out tons of additional chip wafers to make up for the poor yield.

  • The earthquake and tsunami in Japan also hit some of Apple's suppliers hard, making some analysts wonder if Cupertino could keep its mighty supply lines moving along or not. The iPhone 4S did launch a bit later in the year compared to older versions, but I don't think anybody blamed that timing change on short component supplies.

  • OmniVision Technologies (NAS: OVTI) was working on a new and improved camera chip that didn't get ready in time for the iPhone 4S launch. Did Apple hit the brakes? Nope -- Sony (NYS: SNE) saved the day with millions of its own top-of-the-line camera sensors. Bad news for OmniVision, pretty good for Sony, and Apple never suffered from the change.

In short, Apple's gadget builders and component suppliers are better off doing whatever it takes to meet Cupertino's demands than pushing back and risking the loss of a huge contract. Digitimes has a spotty track record at best, and I think the paper is wrong again.

The brilliantly flexible supply chain notwithstanding, I'm not a huge Apple fan. But our senior technology analyst certainly thinks Apple is still a buy. He spells out exactly why in our brand-new premium report on Apple. If you want a broader picture of the smartphone revolution, click below to find out why investors are so excited about this exploding trillion-dollar revolution.

At the time thisarticle was published Fool contributorAnders Bylundowns shares of and has written a covered straddle on OmniVision, but holds no other position in any of the companies mentioned. Check outAnders' holdings and bio, or follow him onTwitterandGoogle+. The Motley Fool owns shares of Cirrus Logic. The Motley Fool has sold shares of Sony short. The Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of Apple.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinion, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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