Apple slashes iPhone 5 component orders

Apple slashes iPhone 5 component orders

Summary: Apple has cut back orders for iPhone 5 components according to the Wall Street Journal, signalling its expectations for the iPhone 5 may have been too high.


Apple has cut orders for parts for the iPhone 5 due to weaker than expected demand, sources have told The Wall Street Journal.

The Cupertino-based company cut back orders with suppliers in December, with iPhone 5 screens for the January to March quarter cut to half the levels the company had previously expected, sources told the paper.

The reported cuts follow warnings from December that Apple's iPhone 5 inventory for the first calendar quarter of 2013 was looking bloated to more phones than necessary being built in the December quarter, according to Citi analysts.

Jefferies analyst Peter Misek noted at the time that iPhone component orders for the first quarter had been slashed from 35-40 million to around 25-35 million units, despite lingering shortages among retailers, according to Forbes.

Samsung rivalry

The reported component cuts come as rivalry between the world's largest smartphone maker, Samsung, and Apple intensifies.

Samsung on Monday announced it sold more than 100 million of its Android Galaxy S series devices since their launch in May 2010.

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The company boasted on Flickr that sales for newer generation devices are accelerating, claiming to have sold 30 million Galaxy S III handsets in five months and 40 million in seven months, giving it an average run rate of 190,000 devices per day.  

Samsung shipped twice as many smartphones in the third quarter of 2012 as Apple, consolidating its lead with 31.3-percent share across the globe, according to analyst firm IDC.

The pair are also battling it out in the all important Chinese market. Apple chief Tim Cook visited China last week to continue talks with China Mobile -- the nation's largest mobile operator by subscribers, which whom Apple has yet to strike a distribution deal.

Cook told media there he expected China to become its largest market, and planned on boosting its retail outlets from the current 11 to over 25 in the near future.   

Apple will release its first quarter results for 2013 in the next fortnight. A recent survey of 57 analysts by Fortune shows the median expectation for iPhone sales for the quarter to December 29 is 49.5 million, up 45 percent on last year.

Topics: Apple, iPhone, Mobility, Samsung, Smartphones

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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  • Good!

    This is good for Apple bcuz it shows that they are not invincible. I'm a HUGE Appke fan but the IP5 is an example of how Apple has started to take their customers for granted...
    • Expected

      Expected with a global debt crisis and depression going on.
      • not expected

        If it was expected they would have ordered less in the first place. The recession is not something that happened last week.
  • Bad news for Apple, but not shocking either

    While the iPhone5 is a really nice phone, it released in late 2012 with features easily found in Android phones from 2011. It is hard to maintain the image of being the best phone when its features lag behind and there are problems with the software.

    Apple needs to be more aggressive with their device releases if they want to remain undisputed king of the hill. Perhaps that isn't the reality anymore and mobile devices are becoming commodities like happened to the PC market.
    • Agreed...

      I have an IP5 and I can say that unless Apple REALLY brings it, this will be my last iPhone purchase. The IP5 is what the 4S SHOULD have been, and it is really and insult that in the face of all of this Android competition this is what they come up with...get it together Apple
      • Agree completely

        I enjoy the iPhone5 but I'm bored already. I'll likely be looking elsewhere for my next upgrade.
    • Apple trying to "remain undisputed king of the hill"?

      Uh, to just what hill and what kingdom do you refer? Samsung sold 2x as many phones as Apple. That's ONE Android vendor (the biggest, but just one).
  • Love these stories

    Who really knows about iPhone demand. On the one hand, all the reports have it that the two major US carriers with the device had a WONDERFUL holiday season. And the report have it that a boatload of devices were activated. You'd think Apple would have gotten its share. But one note - Apple has been pimping the iPad more themselves, and letting the carriers pimp the iPhone.

    But the thing that really bugs me is that we seem to be doing a "here we go again" with this. Remember the last time Apple "tanked" was when a bunch of Wall Street types (probably with manipulators behind them) were spouting gloom and doom over everything from the aluminum on the edges of the phone to the logic of an iPad Mini to why are they still making iPods. Then Apple announces real sales figures and guess what - the sky is still up there. But I bet a bunch of their friends made a boatload shorting Apple on the drop and scooping it up to resell when it went up. Now they need a dip again, so here we go.

    My worry about Apple is that honestly the iPad Mini is their first truly reactionary product since Jobs passed away. And the rumor mill has even more things like that out there. Hope they resist. Because it also scares me how fast the Android bunch is trying to dive to the bottom and become "the new Windows". And we know how that is turning out. We need Apple and Google keeping each other honest, like we need Microsoft and Apple and Linux doing the same thing for PCs.

    And sorry, no, Ubuntu on a phone is not a substitute for a viable and sustainable Android.
  • Why blame some hidden cabal of stock traders for this news?

    Apple stocks went through the roof, because it was seeing massive growth. While Apple is seeing year on year growth, the majority of the market share growth is going to Apples competitors.

    There are a lot of other smaller points that reinforce that, but the important takeaway is that Apple is showing some vulnerabilities in the market and the competition is taking advantage of that. Apple could be doing so much better than it is and cutting supply orders makes that point very clear.
  • Oh wow, this is bad news

    How long before Tim Cook is fired?
  • Many Reasons...

    Though there isn't a physcially better-built phone on the the markety, in an era when we replace our phones every 1-2 years, build-quality has become less of an issue; features is what we crave, and Apple has been too slow to offer new ones.

    Expensive, beautiful, and a little behind the curve won't cut it ...not in the mainstream phone market; Samsung offers tons of features at an affordable price, and that's where the lion's share of buyers will go. Apple will continue to appeal to niche, higher income users, but they will see a steady decline in market-share in the coming years.

    Another problem for Apple is the fact that carriers may heavily subsidizing the iPhone if sales begin to slow. This has always been an issue with carriers and Apple. If carriers lower their subsidies, iPhones sales to the middle-markets will plummet.
    • The Nokia920 is a much better physically built phone than any iphone

      Having had many iphones I can tell you with certainty both Nokia and HTC are now building much better phones than apple. However samsung which is selling like crazy is still much lower quality so youre right about it becoming less of an issue.
      Johnny Vegas
  • Similar to Mercedes

    Daimler-Benz is encountering similar issues with Mercedes. Once a flagship marque, the Mercedes line is faltering due to dated body-styles and stong offerings by compeitors. Safety-features and other auto-technologies which were once only available on their cars are now standard throughout the industry.

    The iPhone shares may of the same problems. It still has cache', but for how long? How long will mainstream, mid-market buyers be loyal to an overpriced phone with fewer features than the competition offers?
  • Cook is Dreaming when it come to China!

    The Chinese are "feature-crazy" buyers. Without question, Asian markets prefer function over form. This is bad news for Apple and the iPhone, because the iPhone has become a "form over function" device.

    Samsung is now a smartphone juggernaut, and it's likely that it will run away with China.
  • Don't Discount the Future Effect of Windows Phone, Either!

    Windows phone is an upopular OS with a tiny APP market that doesn't stand a chance against the iPhone, right?...WRONG!

    I spend a lot of time with various phone OS's, and I can tell you right now that MS Phone 8 is a great mobile OS that will eventually make big inroads into the phone market. It's clean, fast and it offers lots of features that the MS enterprises will love...but its going to take some time.
    • Re: that will eventually make big inroads into the phone market.

      That's what they said about Windows Phone 7, too.
  • Apple slashes iPhone 5 component orders

    Apple's head got too big. Just because they created a new phone did not mean everyone was going to rush out and get one. Add in the heated competition from Microsoft and its not surprising they are cutting orders.
  • Galaxy S III vs iPhone 5.. features?

    The only feature difference I see on the GSIII is the bigger screen. Explain to me what features are missing from iOS 6 that Android has?
    • Here you go.

      In addition to the bigger screen the SG3 has these features over an iphone5

      MicroSD card: user expandable storage.
      USB port
      burst mode/best shot photography
      smart stay (Screen doesn't turn off when a user is looking at it)
      AllShart Cast file sharing
      wider viewing angle screen
      higher screen resolution
      an extra GB of system memory
      user replaceable battery
      longer battery life
      quad core CPU
      picture in picture "video window" functionality
      Google Now
      Integrated google maps/navigation
      1.9mp front camera

      In fairness, what does the iPhone5 have that the SG3 doesn't?

      Maybe I'm missing something, but when I was deciding between the two I could not come up with any major features the iphone5 over the SG3.
      • Also Dont Forget

        Galaxy S 3 Has True split window multitasking.

        Then there is the Note 2 with even more features!