Production of Apple iPhones and AirPods might have returned to pre-pandemic levels
Lead times for the Apple iPhone and AirPods Pro shrink indicating that Apple’s production and supply chain is back to full-strength
Looking specifically at the AirPods Pro, the lead time started at 28 days on February 14th when Loup Ventures first tracked the lead time for the in-ear wearable. That four-week lead time has been reduced greatly down to 1.7 days due to four factors in order of importance. One, when the AirPods Pro first launched in October of last year, production of the accessory was on the low side at first. When production picked up, the lead time went down. That is practically always the case; when production goes up; lead time goes down. Demand for the AirPods Pro, the other side of the Supply-Demand equation, soared during the holiday season (Apple’s fiscal first quarter of 2020) lengthening lead times. Once Santa had finished making his deliveries, demand dropped off resulting in faster lead times.
Also helping to reduce lead times for the AirPods Pro over the last few months is the resumption of production in China and the gain in capacity achieved by these manufacturers. And finally, the economic fallout from the COVID-19 pandemic has caused demand to fall off. Weakness in demand leads to increases in inventory which reduces a product’s lead time.
Munster points out that tracking lead times is useful. He said, “We’ve tracked online lead times for Apple products over the past decade, sensitive to the reality that drawing insights from the data is tempered by the unknown supply, demand dynamic. Despite the shortcomings of the method, historically, it has been a useful tool.” He points out that long lead times for certain iPhone models following the latest launch of the device is “an accurate measure of higher demand.” He also notes that short lead times forecast the least successful iPhone launches. Munster also gives a specific recent example. During Apple’s fiscal Q1 of 2020, the AirPods Pro recorded the aforementioned greater than four-week lead time. During that quarter, Apple’s wearables unit enjoyed record revenue with AirPods top-line growth estimated at a gain of 75% year-over-year.