Apple analysts are trying to calm their nervous clients

“With press reports focusing on employee disputes at key partner Hon Hai Foxconn and some minor product complaints including scratches and ‘purple flare,'” he wrote, “we have been getting many questions on whether this has impacted iPhone 5 supply and demand.”

His answer (I quote):

• From our latest supply chain work, we have not picked up a drop-off in demand and production appears to be improving with the bottleneck moving from components (like the in-cell touchscreen) to the assembly of the iPhone 5 itself.
• Our sources indicate that iPhone 5 is not easy to build with AAPL’s very high standards where it aims to produce each model to be an exact replica where variance is measured in microns.
• From our understanding, it is overwhelming demand that is causing lead times to remain at 3-4 weeks and low stock at the retail level despite increased production.
• In addition, we are picking up much increased component sourcing activity for what appears to be for a smaller form factor iPad.
• We continue to believe iPad mini is the competition’s worst nightmare, but believe attractive price points will be key.
• We do not believe AAPL needs to price as low as $199 to match GOOG’s Nexus 7 and AMZN’s Kindle Fire HD but believe a price point of $299 or $349 makes sense with its entry-level iPod touch starting at $199 and iPad 2 at $399.