Inside The iPhone SE Reveals Surprising Developments In Apple's Supply Chain - Forbes Inside The iPhone SE Reveals Surprising Developments In Apple's Supply Chain
(Photo credit: David Paul Morris/Bloomberg)
Apple CEO Tim Cook is a master of supply chain management. His 18 years at the tech giant have backed up this reputation. In his early days, he cut the process of making an Apple computer down from four months to two, according to Walter Isaacson's biography of Steve Jobs. That's why some of the components inside the new iPhone SE are so strange.
This past weeks has brought teardowns dissecting each component inside Apple's new 4-inch smartphone, the iPhone SE. The news from these teardowns was that the iPhone SE is largely made up of recycled parts from 5s and 6s phones — the iPhone 6s' A9 processor, NFC radio, LTE cellular modem and others; and same iPhone 5s touchscreen controllers from Broadcom and Texas Instruments.
But another interesting element in these teardowns shows how remarkably dated some of these components are — meaning that some of these components aren't just the same chips from older phones, but they've also been lying around for quite some time. Some of the iPhone SE chips were sitting in Apple's inventory for 8 to 11 months, according to a teardown by Chipworks. The A9 application processor innards are dated from the August-September timeframe last year, and the memory is dated from last December, so Chipworks estimates that the chip package was actually assembled this year in January.
Chipworks looks at the date codes stamped onto each chip that says when the chip was tested. In all the years the Ottawa, Canada-based firm has been conducting these teardowns, it's found that Apple has held a remarkably consistent pattern since the iPhone 4 launched in 2010: it took eight to nine weeks between the time the chips were tested, left the packaging facility, put into the iPhone, and sold right into the consumer's hands, said Jim Morrison, vice president of competitive technical intelligence at Chipworks, in an interview.
As the COO and now the CEO, Cook's mastery of Apple's supply chain has enabled the company to scale up production fast with all the latest technology inside its devices and to also keep the company running efficiently. Cook once famously described inventory as "fundamentally evil." So what's changed?
"To me, it looks like recycling of hardware, but I'm wondering if the iPhone 6s sales were underperforming than what was expected," Morrison said. "Cook prides himself on his ability to reduce inventory on something to the order of one to two months. But some of these chips tracked back to last year. That says the inventory grew considerably. This is a way of moving that inventory to a new phone."
Apple is a smart manufacturer and this repackaging of old hardware to hit mid-tier markets is a good idea. But excess inventory is never a good sign.
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