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Apple supposedly cuts orders for iPhone 5 components

Apple supposedly cuttings orders for iPhone 5 components

Apple has supposedly cut orders for iPhone 5 components, including screens by roughly half. This according to two people familiar with the matter, one of whom also said other component orders had also been cut. Apple apparently notified the suppliers last month, (both?) of the people said. Juro Osawa of the Wall Street Journal claims that it's because people aren't buying enough iPhones.

The move indicates that sales of the new iPhone haven't been as strong as previously anticipated and demand may be waning. It comes as the company has been facing greater challenges from Samsung Electronics Co. and other makers of smartphones powered by Google Inc.'s Android operating system.

The rest of the article races through Apple vs. Android market share numbers, and careers around any profit share mention, before heaping more praise on Samsung, mentioning the realities of the panel market, and then slamming strait into a reminder that Apple will report earnings later this month.

Apple no-commented, of course.

The Wall Street Journal generally has a good track record when it comes to Apple rumors. However, rumors of Apple cutting orders, both true and fabricated, come along every year. Sometimes people want to manipulate stock. Sometimes companies want to leak bad news to soften its impact. Sometimes deals fall through or business realities change. Sometimes new products are coming that cause a down-shift in old ones. And sometimes good data gets interpreted wrong. What if half their orders are still more than 2012 levels? Does the context change then? Without numbers, real numbers, it's flying blind.

Wall Street (the actual financial district, not the Journal) is wacky when it comes to Apple, punishing them for among the highest profits in the world, while rewarding companies that have barely if ever turned a profit. In the meantime we have AT&T and Verizon in the U.S. pre-announcing record smartphone sales, and Verizon reporting a higher iPhone mix than ever before.

Apple will report their earnings at the end of January, and they may or may not exceed Apple's own forecasts and/or the Street's forecasts, but the guidance the guidance they give for Q2 2013 will be telling, and the conference call that follows will almost certainly have Apple's CEO and CFO, Tim Cook and Peter Oppenheimer, there to answer questions.

Until then we have a person and a half of unknown affiliation telling the Wall Street Journal that the iPhone 5 isn't as in demand as Apple thought it would be, and that's about it.

Update: Reuters, in a Nikkei-based article echoing the WSJ, pegs the change as down from 65 million iPhones. Apple sold 35 million in Q2 2012, and 18.65 million in Q2 2011. Given the maturity and competition in the market, it's tough to see how, absent a major new deal, Apple could expect to once again double their orders in the post-holiday quarter. Makes the kind of sense that doesn't.

Source: Wall Street Journal, Reuters

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, The TV Show, Vector, ZEN & TECH, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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There are 30 comments. Add yours.

okli says:

WSJ same as BI and SAI are payed by Hedge Funds for those kind of" Reports" very well... all they want is to sell tons of PUTS(sells options) and load tons of dirt cheap CALLS(buy options)... do not let them full you around... DUDES... Apple will report it's best QTR in history with over 60Bio in revenue... with over 30Mio iPads and over 30Mio iPhones... later this months !!!

bkDJ says:

Sounds like the Wall Street FUD-machine running on all cylinders... Oh and I think auto-correct is trolling you. careers->careens, strait->straight.

SockRolid says:

Could be Apple dumping Samsung for Sharp et al. Wouldn't want to let Samsung get a look at Apple and Sharp's (thoroughly patented) IGZO-based OLED production process.

bubbly1724 says:

Either you are seriously delusional or just plain retarded. The only manufacturers for the iphone 5 LCD are Japan Display, LG, and Sharp. Samsung isn't even supplying Apple, and high-res IGZO's won't be out in mass production for a while.

Premium1 says:

hahah burn.. Someone get sockrolid some ice.

luqman24 says:

Lol looks like the iSheep are finally getting bored of iOS and Apple realizing they aren't sh*t anymore.

slyrobber1 says:

Wise wordz from Winnipeg!!! What a joke!!! This from a turkey too stupid to come out of the deep freeze. Shut up troll.

InsanelyGr8 says:

65 million? Wow!!!! If those numbers are accurate......

SteveW928 says:

"Wall Street (the actual financial district, not the Journal) is wacky..."
No kidding, and even worse whey they've misplaced their lucky rabbit's feet.

Easy-G says:

Not an expert here, but I think this is partly the result of iPhone buyers wanting their iPhone as soon as it is released. Demand appears inflated because of the huge pre-order numbers and sales at launch that don't really say anything about demand for the rest of the year. I think this phenomenon is unique to the iPhone because EVERYONE knows when it's being launched, whether we are buying or not - the same hype, and concentration of demand at launch, is not there with other phones.

Tre says:

This is the result of an iterative product (while sexy) did not bring a whole lot new to the table. That's why there will continue to be a hoard of 4 and 4S owners waiting for a substantially new form factor. As Rene mentioned in previous articles, the 4 and 4S still have the specs to be good phones.

uwatto says:

tre you hit the nail on the head,and when such a phone is released the sales will be through the roof

angermeans says:

I wouldn't call the iPhone 5 an iterative update. Maybe on the software side from 5.0 to 6.0 I'd agree, but the iPhone 5 made everything better than an already industry leading iPhone 4 and 4s design. The display is hands down better, the processor is still unmatched (and what apple did with the A6 is phenomenal considering it is manually clocked and no one in the industry is attempting this due to cost and other factors, the hardware is lighter, stronger, thinner, and better looking, the size (while subjective) is larger and (at least to me) seems to be a perfect size, LTE (which is the best radio I've used hands down when it comes to Verizon LTE As it never drops coverage whether using hotspot or just the phone), and much better performance. I'd say that apple completely made everything better from the 4s to the 5. If you look at other manufacturers like Samsung the difference between the Gs2 and GS3 was iterative while the iPhone 5 made huge strides in the hardware department. Yes it is still very much an iPhone p, but it easily surpassed the already great 4s in every spec. Now if we could just see the same with the software then we would be talking. I didn't think I needed the iPhone 5 and it was the first in awhile that I didn't update very early in the product cycle, but now having it I can easily tell the huge improvements in this device over the 4s. Apple does this like no other hardware company in the world.

Dark_Blu says:

Isn't it a bit early for Apple to cut orders for parts? Sounds like stock manipulation to me. iPhone 4 owners were do a contract upgrade and bought the iPhone 5. iPhone 4S owners weren't due a contract upgrade in 2012 and therefore, didn't buy the iPhone 5 (unless they just felt the "needed" it for some reason. If history is any benchmark, this year's iPhone 5S will be little more than a same design, camera upgraded, Siri with new tricks, faster CPU, possibly more memory, iPhone 5S. That may be enough to attract Fanbois and fangirls, but if that's it, it won't likely attract new customers or convince any fandroids to jump ship.

LCW says:

Maybe this is a sign that Apple is bucking the trend (3>3GS, 4>4S, 5>???)... Might hint a new design is in the works sooner than expected...

Premium1 says:

Well rumors were that they were going to use a different screen tech in the next iphone so if that is the case it makes sense to cut the orders for the old screens used on the iphone 5. Same with the internal components since even if it was a 5s that is released it most likely would have a different/newer processor/internals.

mritalian76 says:

Agree. I believe the next Iphone have a all new design and all new ui now that Jony ive is running both design and software.

kch50428 says:

Doesn't the iPodTouch use the same screen part as the iPhone5?

YorkieRay says:

Yes it does have the same screen and the screen is usually the most expensive component.
A 64GB iPod Touch costs US$399, whilst a 64GB iPhone 5 costs US$849. What do you get for that extra $450 on the iPhone?
It's about time Apple's customers started asking some questions.

arin.failing says:

I have a sneaking suspicion that this may correlate to the Tim Cook / China Mobile meetings recently. If this rumor is true (which there's no reason right now for it not to be perceived so), I think that Apple was anticipating China Mobile to come on board after Tim Cook met with them, recently. Apple would want to put the iPhone 5 into the hands of as many China Mobile customers as they possibly could on launch day, and in the coming months. I would suspect that this means that the negotiations didn't quite go as planned.

That's just my thought.... and I'm sure I will have plenty of readers tear this hypothesis apart, and pepper it with unnecessary derogatory comments. So have fun guys!

pstmd says:

I'm sure ATT's decision not to let iPhone owners already under contract to buy at the subsidized price had and impact on sales as well.

I'm not issuing a value judgement about the fairness or appropriateness of this market decision. This is just the first time ATT has done this and it surely has had an impact on sales.

A lot of 4S users are still locked in and won't be released until spring. At that point I at least will wait for iPhone 6

GlennRuss says:

I can really see that. I bought mine later, and my contract will not be up until August. I can wait until the 5S or 6 comes out. The 4S is a great phone, and the issue will be contract, and Apple software support. I usually buy when my device is no longer supported.

Dev from tipb says:

So Wall Street is not "punishing" Apple for high profits. Stock prices consider both current performance and growth potential. Wall Street is setting its price based on Apple's cash strategies.

Apple often chooses not to pay dividends, or to pay small dividends. Typically, a company makes that choice when they want to husband their cash in order to finance future growth, so despite Apple's size Wall Street treats Apple more like a growth stock than a large company stock when setting its price. In that light, any reports (like this one) that may negatively impact Apple's growth are going to slam their stock more than they might another large company that pays hefty dividends.

So Wall Street has not been "wacky." What they have been, however, is wrong. When Wall Street "punishes" Apple, they are in effect saying "your behavior says you expect massive growth, and we do not believe you can hit that target." And, from their point of view, it makes sense. Rarely have we had a publicly traded company of this size act like a growth company, and *never* we ever had a company this size post such consistently large growth rates. In such virgin territory, Wall Street is going to err on the side of caution. If you disagree, you still have a chance to make a nice chunk of change :)

Enzo83 says:

I am still loving my iPhone 4. Pre-ordered it when it came out to Verizon back in Feb 2011. While I am on Verizon with unlimited data...I really do not want to lose it to get the 5 with LTE. That's one reason why I don't care to upgrade to the 5. Another thing mentioned in comments above is about the form factor. While I HATE the form factor of the 4 and on (loved the 3gs and older), the 5 still doesn't make me change my mind. Hello same form?? And I don't care if the design works- lets make better. No people want different. Or at least I do. Speaking of the 5 and form factor....longer phone? No thanks. I think a wider phone would fit my hand pretty well if we had a wider screen. Developers cry about having to change their ways? Well it's iOS I think people will change it up since there is a ton of users getting their apps. Most people use the phone with two hands more than most of the time. 4.5 inch is not the end of the world, but that should really be the max of a phone...at least that's what iPhone should do. They need a NEW form factor for sure. That's what I am waiting for. They also need to remove that stupid home button and just make it touch. Any reason why it can't be touch?? It needs a new look. It just does. But they also need to bang out a really powerful new OS experience. While keeping it legit and easy to use for everybody, they need to add different ways things open or like Rene pointed out last night and I was drooling over it, was when we get notifications and we are in an app, why can't we stay on the same app and just have a little space to do something and just get it done and easily just get back into what we were doing? They need something drastic for the iPhone. If they are about hardware and making an OS work great, then change the OS experience to be not as annoying. It's a smartphone for a reason. Remember An iPod, A Phone and an Internet Communicator-Repeat?? Well how about OS, User, Love? Ok that was off but you get what I am saying. I think the addition of an SD slot would help. Surprise us Apple! Think Surprise. I think that will get more people to use them. Yes they have many products that cost a fortune, but this is the mobile space we are talking about. We take them with us everywhere. People will look to other things that will be the new and better and Apple will just fall back because of the way they do things. Maybe it was feasible back in the day, but they seriously need to wake up and smell the apple because they will be turned into applesauce if they don't get their phone whipped up into something worth buzzing about. Can't wait to see what's in store for iOS 7 and the new iPhone! And let's see if this new team at Apple can give us what we want and bake us some apple pie instead of apple crisp. Now I want some pie.

Charlf says:

Apple is pulling a blackberry here, lack of innovation of your UI is the death of any device company. Left blackberry when they were sinking for Apple now Apple doing the same stagnation effect, no wonder most of my iPhone converted buds are now leaving for android.. Wake up Apple!!!!! iOS is brilliantly user friendly and easy to use but after many year has become boring especially with all your restrictions. Update it and set it free!!!

YorkieRay says:

The markets seem to think that things may be changing now. RIM will be launching their all new os BB10 in 2 weeks and on the back of that RIMM shares surged by 10.25% today. By comparison AAPL shares fell by 3.57%.
http://www.technobuffalo.com/2013/01/14/is-apple-in-trouble-as-focus-tur...

iRy757 says:

True Apple fans are more than happy with the release of every iOS device, why? Because we all know what these devices have to offer. We all know that our mobile operating system won't crash on us after a certain period of time, we know that technical support is at hand and face to face when we need it, we know that everything we need for our daily productivity works and works well on our iOS device. You can yearn for something "new" all you want, that's great, but personally I've never been one to follow trends. I don't care what specs are on the newest [other] devices, because I'm content with what device I use daily. Find what works for you and stick to it, stop trying to follow the "newest" trend.

GreenDize12 says:

I will have to disagree on certain things you said:

"we all know that our mobile operating system won't crash on us after a certain period time" - not entirely true. Hell, you don't need a 3 year 3GS to see it, I've had OS issues even on the iPhone 5.

2nd, while true in some cases, it's not necessarily about following trends. Actually, Im almost positive that the vast majority of the average joe, bought the iPhone because "it's whats in." Hell, I've ran into people that don't even know how to use an iPhone or have much need for it. The excuse?? "It just look really nice." how much more trendy can a materialistic item get?? I got the iPhone in 2008 because I knew back then the potential of the device and the possibilities it has to offer. iPhone OS 3 began to prove that, IMO. However, the release of the iOS is what started to made me feel like Apple was falling behind. Forget that the iPhone 5 has a similar design (it's more like an iPhone 4/4S makeover IMO), but the fact that iOS 6 offered something that did not Wow me and the features it bought, I have yet to use. This is just me though.

Also, while I believe that ALL mobile OS may suffer this issue, the lacks of themes is what really has me bored with iOS, hence still a need for Jailbreak. Almost everyone I know with an iPhone is amused with the ways I theme and tweak my phone (such as Voice notifications and the Ayecon theme), and wish they could do the same without having to Jailbreak.

Now I'm not saying that iOS is filled with major flaws, but for anyone to say there isn't flaws is probably as the Internet trolls say "sipping on the Kool-aid" or whatever, or may actually really be fine with it, who knows. It's not about following trends, it really is about wanting something new. If it really is about trends, and the iPhone is a trend, then Apple MAY need to brace itself a bit.

Again, this is just base of my observation and everyday experience, so others will have different experience than me. The OS may not have any issues, but it's definitely boring as s***.

GreenDize12 says:

P.S - before anyone says anything: No, I will NEVER go to Android's buggy OS. Windows Phone 8 however, is something ill be keeping my eye on for the next year.