Report: Apple Cuts iPhone 5 Orders in Half Due to Weak Demand

iPhone 5 Orders Cut in Half

Apple has cut orders for iPhone 5 components in half, according to a report by The Wall Street Journal Sunday. The move, an indication of weaker-than-expected demand for Apple’s flagship product, was communicated to suppliers in late December and covers orders for the January through March quarter.

Citing sources familiar with Apple’s supply chain, The Wall Street Journal notes that the company’s orders for displays and other components exclusive to the iPhone 5 have “dropped to roughly half of what the company had previously planned to order” and that this indicates that “sales of the new iPhone haven’t been as strong as previously anticipated and that demand may be waning.”

The news comes days after Canaccord Genuity analyst Michael Walkley noted strong sales for the iPhone 5 in the United States, and revised his quarterly estimates upward. He also concluded from carrier surveys that the iPhone 5 was the top-selling smartphone across the board, although its lead was shrinking by December.

Another factor that may influence demand is the addition of the iPhone to large Asian carriers. Key Apple executives, including CEO Tim Cook, were recently in China for meetings with government officials and carrier executives. It was also reported last week that DoCoMo, Japan’s largest carrier, is open to carrying the iPhone for the first time. However, in both instances, sources suggest that any deal won’t take place before the launch of the next iPhone, which would do nothing for component orders specific to the iPhone 5.

It has also been rumored that Apple will adopt a six-month release schedule for its key products, and doing so would mean an early spring release for the next iPhone. A short release cycle and continued discussion of a future “low-cost” iPhone model may have been key factors in Apple’s decision to cut orders, if that report is accurate.

Sunday’s WSJ report, along with lackluster performance of the company’s stock, will bring increased focus to Apple’s first fiscal quarter earnings report, scheduled for Wednesday, January 23, at 5:00 PM EST. The Mac Observer will provide live coverage of the call and analysis of the results.