Apple To Build 5 Million iPads In First Half 2010, Analyst Says
Apple (AAPL) is on track to build 5 million iPads in the first half of 2010, according to FBR Capital chip analyst Craig Berger. — “We believe various news articles and competitor notes calling for a build delay were just false alarms,” he writes.
Context & Ripple Effects
When Apple unveiled the iPad in January, [[a:1186939|Wall Street framed it as a risky bet with first-year sales of anywhere from 1 million to 5 million units]] — a wide band that reflected genuine uncertainty about whether the device would find buyers. FBR Capital chip analyst Craig Berger's new note attacks the problem from the opposite direction: instead of guessing demand, he reads Apple's component orders and concludes the company is on track to build 5 million iPads in just the first half of 2010.
That build figure matters because it sits at the top of the full-year range analysts had been debating, and because Berger explicitly dismisses competing notes calling for a launch delay as 'false alarms.' A supply-chain analyst staking his channel checks against rival bear cases makes this note a referendum on Apple's launch readiness, not just another estimate.
First-order effects
- Apple's component suppliers now have visibility into a first-half build of 5 million units, locking in orders and production schedules ahead of the April launch window — with iPads reportedly already shipping to Apple Stores for employee training.
Second-order effects
- Carriers positioning service bundles around the iPad, Verizon among them, gain a larger addressable base than the low-end forecasts implied, while e-reader and netbook vendors face a competitor that plans to flood retail channel inventory from day one.
Third-order effects
- If the 5-million-unit ramp holds, Apple is treating the tablet not as an experimental niche device but as a mass-market line scaled at iPod/iPhone cadence from generation one — resetting what competitors must commit to before entering the category.
The trend: Supply-chain component orders are becoming the market's preferred early indicator for whether a new Apple product category gets scaled for mass market or kept as a cautious experiment.