Virtual Pants

Don Reisinger at CNET:

All of that talk that Apple has reduced iPhone 5 component orders due to slumping demand for the smartphone might be wrong.

Sterne Agee analyst Shaw Wu today wrote in a research note to investors that Apple’s reported cuts to component orders have nothing to do with weak demand. Instead, Wu said that while component orders are lower, they’re due to “much improved yields meaning lower component builds and supplier shifts.”

I’m not exactly sure how component ordering works, but something here doesn’t add up. If a company orders, say, 1,000 displays from a component company, what do the yields have to do with it? The component company might need to produce more or less displays based upon the yields, but the order of 1,000 displays stays the same. However, if the component company simply sends 1,000 displays (good or bad) to Apple, and Apple must order more if they aren’t good, that might explain it. It’s tough to believe that’s how it works, though.