Tim Cook frustrated about capacity issues


Apple CEO Tim Cook is frustrated about capacity issues in the supply chain. It's a big problem, with Apple demanding high-tech, high-quality, high-volume orders, and suppliers are struggling to keep up. It's a $1-billion problem.

Neve fear, Apple has the answer.

Supplies of the iPhone X were scarce at launch, and improved slowly, with manufacturing catching up on quality control and parts supply after the launch of the phone.

Moving in to 2018, Apple is expected to incorporate the TrueDepth camera system in to more of its devices, including a refreshed iPad Pro, a revised iPhone X, a new iPhone X Plus, and perhaps even a revised MacBook Pro.

TrueDepth enables Face ID to unlock and secure your device, and replaces Touch ID on iPhone and iPad for Apple Pay. Adding TrueDepth cameras to the MacBook Pro may not be completely necessary, but creates feature parity in a world where Apple seems to be phasing out fingerprint recognition.

Apple suppliers accept huge orders from Apple, then have to fund the manufacture of parts. Not everyone has immediate and reliable access to hundreds of millions of dollars to deliver these orders.

The answer is...

The answer is the $1 billion Apple Advanced Manufacturing Fund.

Apple will "invest" in its suppliers, offering cash to support the production of parts in its supply chain, removing bottlenecks and allowing assembly to keep up with demand.

Case in point: Finisar, a component supplier for the highly complex TrueDepth camera system.

Apple recently invested a huge $390 million in Finisar, to improve its ability to produce the components for the camera system. This then enables FInisar to ship parts to Apple assembly partners, where parts are brought together on the assembly line, resulting in more iPhones making their way to customers.

Apple is essentially financing its way out of a supply bottleneck.

Apple will need a fast and reliable supply of camera modules, to realise its ambition of integrating TrueDepth and Face ID into various products in 2018.

Similar cash infusions

A similar investment was made to produce the "trashcan-shaped" Mac Pro in the United States.

A separate bucket of money made its way towards LG, enabling LG and Apple to co-design the LG UltraFine 4K and UltraFine 5K Thunderbolt displays.

Expensive Technology

Apple has a penchant for producing premium products, capped off by the new iMac Pro.

The delicious new iMac Pro set tech-heads into a spin, with its 8, 10, 14, and 18-core configurations, huge RAM options, and high-powered graphics card credentials. The base model costs US$4999 and the top configuration is priced at US$13,199.

Prices don't stop escalating there. We feel sorry for our friends in Australia, who can order the same US$13,199 top-spec iMac Pro for an eye-watering AU$20,638 in Australian dollars. You can buy a VW Golf for that kind of cash.

If that wasn't enough, customers were forced to wait 3 to 9 weeks to receive their online pre-orders.

Until next time,

Xavier Zymantas

XYZtech

XYZ Media Group

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