Apple Slashes Orders for iPhone 5 parts

Apple has reportedly told its overseas suppliers to slash production and ordered manufacturers to cut back production by as much as 80 percent. According to people familiar with the situation, sales of the iPhone 5 were less than anticipated possibly due to reduced consumer demand and lingering problems due to production times.

Apple has notified its screen manufacturers–Sharp, LG, and Japan Display–to cease production by 50% and it has been hinted that Apple requested Japan Display to temporarily reduce production by 80 percent. Apple is also said to have reduced production on its memory chips, manufactured by Samsung, one of their chief competitors. News on the Apple’s production cuts did not go unnoticed by Wall Street with Apple dipping below US $500 to $498 for the first time in almost a year.

I expect many of the earlier problems, mostly brought on by the software and not the phone itself, coupled with the quality control issues Apple was dealing with overseas have no doubt contributed to the reduction in manufacturing. Another factor to consider is Apple uses several different manufacturers for similar parts, so the full extent of the cutbacks may not be known. With a rumoured replacement for the iPhone 5 on the way, it may not be prudent for Apple to ramp up production with a new and hopefully improved phone on the way.

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