The Wall Street Journal is reporting that Apple is cutting component orders for the iPhone 5c by up to a third, reiterating the news that Apple is curtailing iPhone 5c production. This backs up a multitude of reports by industry analysts, which said that iPhone 5c demand is weaker than Apple’s initial expectations.
Apple told its Taiwanese assemblers Pegatron Corp. and Hon Hai Precision Industry Co. that shipments of the iPhone 5C in the fourth quarter would be cut, the people said. Pegatron, which analysts say assembles two thirds of the iPhone 5Cs, was told orders would be cut by less than 20%, said a person familiar with the matter. Hon Hai, which assembles the remaining low-cost iPhones, was told orders would be cut by a third, said two people familiar with the matter.
In the past, Apple CEO Tim Cook has cautioned against supplier shipments analysis as an indicator of sales performance, saying that Apple sources components from multiple manufacturers. However, the sheer number of independent reports about cuts to iPhone 5c suggests there is some underlying truth to the story. On the flip side, iPhone 5s sales seem to be booming, doing better than predicted.
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The Wall Street Journal says that Apple has raised orders for the 5s, according to two Hon Hai executives, an iPhone manufacturer. These sales forecasts seem to reflect the consumer-facing situation. Whereas the iPhone 5s remains supply constrained (and out of stock in many areas), the 5c is available to dispatch from Apple’s online store within 24 hours and has received deep discounts at third-party retailers almost immediately after it launched, suggesting demand for the latter model is lower.
Apple will report its fiscal Q4 earnings next week, which will include sales numbers for the first week of iPhone 5s and 5c sales, although Apple is unlikely to publish the sales split for competitive reasons.