Report: Apple Cuts iPhone 5 Supply Orders As Demand Wanes

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Apple reportedly is scaling back component orders for the iPhone 5 after demand for its latest smartphone started to taper off in the fourth quarter.

According to a report Monday from The Wall Street Journal, Apple has slashed first-quarter orders for iPhone 5 screens by nearly half, while also scaling back orders for other components found in the smartphone. The Cupertino, Calif.-based company warned suppliers of the cuts starting last month, the Journal said, citing "people familiar with the situation."

Apple stock fell more than 3 percent when the market opened Monday morning, falling below $500 for the first time in almost a year. The company did not immediately respond to a request for comment.

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Sanford Bernstein analyst Alberto Moel told the Journal that Apple was likely forced to cut iPhone 5 component orders after placing especially large orders for the fourth quarter, leaving the company with excess inventory.

Meanwhile, Apple has faced increased competition in the smartphone market from rival Samsung over the past few months. Gartner reported in November that Samsung solidified its position as the world's largest smartphone maker, selling 55 million smartphones during the third quarter and nabbing an industry-leading 32.5 percent market share. Apple maintained the runner-up position for the quarter, selling 23.6 million iPhones and accounting for a 14 percent share of the worldwide smartphone market.

Gartner said strong sales of Samsung's Android-based Galaxy smartphones helped the company maintain its top spot and widen its lead over Apple. Samsung's success in the smartphone market also has been attributed to it offering such a wide range of Android-based devices at a variety of price points.

Apple launched the iPhone 5 in September, sparking the usual frenzy among iPhone fans to get their hands on the new device. Demand for the latest iPhone initially was so high that some Apple suppliers, including Foxconn Technology Group, expressed concern about not being able to keep up with orders.

The iPhone 5 is bigger than prior iPhone models, touting a 4-inch rather than 3.5-inch screen. It's also thinner than its predecessors, measuring just 0.3 of an inch thick, and has a 1,136 x 640 screen resolution. The iPhone 5 also runs Apple's next-generation A6 processor, arming the smartphone with twice the performance and speed of the iPhone 4S and earlier models.


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