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Apple Analysts Still Optimistic as Supply Problems Alleviate

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The iPhone 5 will launch in China soon. In an interview, the Chairman of China Telecom said, "We hope to offer it this year but, what I say doesn't matter."

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Piecyk maintained his projection of 47.5 million iPhone 5 sales in the December quarter.

Yesterday, Apple Insider reported Sterne Agee analyst Shaw Wu conducted checks within Apple's supply chain, finding the supply chain has improved its iPhone 5 production capacity since the device's launch in September. Consequently, Wu believes Apple will sell 46.5 million of all models of the iPhone in the December quarter. Apple sold 26.9 million iPhones in the recent September quarter.

These reports have relieved some fears about Apple's supply chain after Hon Hai Precision Industry (TPE:2317) Chairman Terry Gou stated, "Market demand is very strong, but we just can't really fulfill Apple's requests." The company has struggled to meet Apple's quality demands. However, Wu noted in his report that the supply chain bottleneck shifted from the production of the components to the assembly of the smartphone itself, and Foxconn Technology (TPE:2354), a subsidiary of Hon Hai, produces the iPhone and iPad.

iPhone 5 in China

According to a Wall Street Journal report, China Telecom (NYSE:CHA) may launch the iPhone 5 early in China, pending approval from the government. If permitted, the company will begin selling the smartphone in late November or December. China Telecom Chairman Wang Xiaochu said in an interview, "We hope to offer it this year but, what I say doesn't matter."

Apple CEO Tim Cook also wants the iPhone 5 in China before the end of the year as China accounted for $5.7 billion, or 16%, of Apple's revenue in the recent September quarter. Apple's iPhone has dropped out of the top-five most popular smartphones, and the company wants the iPhone 5 to make the list again. (Also see China: Apple Drops Out of Smartphone Top 5; Starbucks Coffee Called a "Woman's Drink".)

Amit Daryanani reported that Apple will likely begin selling the iPhone 5 through China Unicom (NYSE:CHU) and China Telecom first. China Mobile (NYSE:CHL), the world's largest mobile operator, is expected to begin selling the iPhone in early 2013, but it currently has no official agreement with Apple. Daryanani predicts China Mobile could sell between 10 million and 16 million iPhones in the first year.

The Wall Street Journal article mentioned that analysts believe Apple may have held off on pushing the iPhone 5 in China because it wanted to meet the demand in the US first. It is unknown how the demand from China will impact the pressure on Apple's suppliers.

Twitter: @ChrisWitrak
No positions in stocks mentioned.
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