Report: Apple Cuts Orders for iPhone 5 Parts Amidst Weak Demand

Apple has reportedly slimmed down orders for iPhone components amidst sluggish demand, according to a report in the Wall Street Journal.

Citing "people familiar with the situation," the Journal said orders for iPhone 5 screens have been halved, while Cupertino has also cut down on orders for other iPhone parts.

The Journal pointed to increased competition from Samsung and phone makers with Android-based devices. Samsung emerged as the biggest phone maker of 2012, surpassing Nokia for the first time in more than 14 years. In the three months ending in November, 26.9 percent of mobile phones in the U.S. were made by Samsung, according to recent data from comScore.

Japan's Nikkei had a similar report. Apple cut orders from Asia-based LCD panel suppliers Sharp, LG Display Co., and Japan Display, the paper said. The report found that Apple planned to order 65 million units, but according to its sources that figure has now been cut in half due to weaker than expected demand. In addition to the panel orders, the report also claimed that orders for other iPhone 5 components from Japan's Seiko Epson, Murata Mfg. Co., and TDK Corp. have also been reduced. One iPhone parts manufacturer is quoted as saying, "Since this month, iPhone-related orders have shrunken by half."

That's not to say that Apple is going the way of RIM, of course. Apple was the second most popular phone maker with 18.5 percent of the market, comScore found. The company's iOS platform also came in second on the smartphone front, capturing 35 percent of the market.

Apple's iPhone remains a popular choice, particularly in Japan. Just last week, Japan's leading wireless carrier, Docomo, finally broke its long held denial of the iPhone's popularity with Japanese consumers as its CEO, Katoru Kato, publicly stated that the company would be willing to carry the device under the right conditions. That shift in strategy was seen by many as a response to the company's loss of over 40,000 customers in the latter half of 2012 as Japanese subscribers switched to Softbank and KDDI, presumably in order to pick up the iPhone 5.

At this point, the concern for Apple is how long it can keep the iPhone train moving, the Journal said. There were conflicting reports recently about whether Apple was prepping a low-cost iPhone for emerging markets, which might help boost its global market share. Apple has a relatively limited smartphone lineup, whereas Samsung basically has an Android phone for every occasion and demographic.

In related news, meanwhile, human rights group Students and Scholars Against Corporate Misbehaviour (SACOM) reported Friday that there was a worker strike at Apple supplier Foxconn. "On 10 January, a strike erupted at Foxconn in Fengcheng, Jiangxi Province to demand wage increase and dignity. On the following day, over 1000 workers took to the street and block the main road," SACOM said.

SACOM reported the same thing back in October, but Foxconn said it was a worker disagreement rather than a full-blown strike. Ironically, that October strike was reportedly in response to stressful quality controls that were put in place as workers struggled to keep up with the crippling demand for the new iPhone 5.

For more, see PCMag's review of the iPhone 5 and the slideshow above. Also check out PCMag's 2012 year in review for Samsung and Apple.

For more from Chloe, follow her on Twitter @ChloeAlbanesius.

Source: http://www.pcmag.com/article2/0,2817,2414248,00.asp?kc=PCRSS05039TX1K0000762

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