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Apple trims orders for iPhone 5 components due to weak demand: Report

Apple trims orders for iPhone 5 components due to weak demand: Report

By KS Sandhya Iyer | Updated: 14 January 2013 15:41 IST

Fresh reports brewing out of Japan's Nikkei via The Wall Street Journal indicate that Apple has cut orders of LCD panels for its iPhone 5 due to a "weaker-than-expected demand".

Apple's orders for iPhone 5 screens for the January-March quarter, for example, have dropped to roughly half of what the company had previously planned to order.

Apple initially planned to order 65 million units in Q1 2013. Citing two people familiar with the situation, the report also mentions that the Cupertino-based giant has also dialled down orders for other iPhone 5 components apart from screens. The suppliers were notified by the company last month. Apple buys screens from Japan Display, LG Display and Sharp.

According to the reports, while Japan Display is expected to reduce output by 70 to 80 percent compared to Q4 2013, Sharp is likely to lower production this quarter by almost 40 percent.

Apple is yet to react to the reports.

Apple's shares dropped last month as a result of various reports from analysts that Apple was cutting down orders of its latest flagship smartphone in Q1 2013. The report notes that such a move by the company can be attributed to weak sales of the iPhone 5 and a subsequent decline in the demand as well. Business Insider, however, goes deeper into analysing some other reasons highlighting the possible reduction in component orders.

The first reason is that manufacturing of the iPhone 5 could have gone better than expected, meaning the iPhone 5 is getting manufactured faster than Apple earlier anticipated. The report also quotes recent analyst reports that the company is planning to launch the next iPhone in May-June, as another possible reason for the reported trimming down of orders.

Back in September last year, Sharp executive said that it is making "adequate volumes" of displays it is known to supply for Apple indicating that a possible bottleneck in supplies of screens may have eased. Analysts had blamed a shortfall in supplies of display for leaving Apple with too few iPhones to meet burgeoning demand at its launch.

Sharp has been struggling financially with a cash crunch and losses from its television operations. In one of his September reports, Deutsche Securities analyst Yasuo Nakane estimated iPhone screen capacity for Japan Display and LG Display at eight million a month each and at six million at Sharp. Displays for Apple's first lot of new iPhones likely came from only LG and Japan Display, Nakane added.

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