Apple said to scale down orders for iPhones

Some iPhone component makers had idle capacity in the last two months

Apple's component suppliers are bracing for cuts in sales as the iPhone maker has apparently pared down its orders for the phones.

Problems for Chinese iPhone factories were seen in the final two months of last year, when they had some surprisingly idle capacity, at a time when they would have been usually rushing to meet orders from Apple, reported the Wall Street Journal on Tuesday.

Apple, which usually intimates its projections of its requirements to makers in advance, has cut its order forecasts to iPhone suppliers in the past several months, WSJ said, quoting three people familiar with the company’s supply chain.

Apple has decided to trim production in the current quarter because of a pile up of inventory of the iPhone 6s and 6s Plus with retailers in markets including China, the U.S., Europe and Japan, according to the Nikkei business daily.

"I think we're more than likely experiencing some supply chain hiccups and component vendor switching," said Patrick Moorhead, president and principal analyst at Moor Insights & Strategy. "I do not believe we are seeing issues with Apple's competitive standing, and that's what matters."

Even Foxconn, a key Apple supplier, appears to have been affected and some workers at its Zhengzhou factory in China were sent on early holiday in December, ahead of the usual new-year holiday season in February, WSJ said, citing a person involved in the supply.

Apple is expected to reduce production of its latest iPhone 6s and 6s Plus models by about 30 percent in the first quarter, although it had initially told component makers to keep production of these models for the quarter at the same level as for the earlier versions iPhone 6 and 6 Plus a year earlier, Nikkei reported. Production is expected to return to normal by the second quarter, it added.

The Cupertino, California, company shipped 48 million phones in the third quarter for a 13.5 percent market share, up from 11.8 percent in the same quarter a year earlier, according to IDC. Most of the smartphone demand and growth is, however, expected to come from low to mid-range handsets, particularly in emerging markets, the research firm said.

Apple could not be immediately reached for comment.

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John Ribeiro

IDG News Service
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