Apple (News - Alert) has told its suppliers to cut back production on the iPhone 5c. Both of Apple’s Taiwanese assemblers, Pegatron and Foxxconn, were informed that fourth quarter orders will be cut by around 20 percent for the larger producer and 33 percent for the smaller, according to a report by the Wall Street Journal. One of Apple’s component manufacturers said its orders were being cut by 50 percent.
Foxconn reported that along with cutting orders for the 5c, it was told it would need to increase the number of 5s models for the fourth quarter.
Apple’s lower cost iPhone (News - Alert) has been highly criticized since its release for being too expensive. The more expensive iPhone 5s is out selling the iPhone 5c two-to-one a new report by Consumer Intelligence research Partners shows. Many analysts are warning investors to stay clear of the 5c assemblers.
Larry Dignan of ZDNet, however, thinks it's "too early to go crazy and start calling the iPhone 5c a flop," noting that the cuts "may indicate inventory tweaking more than a dramatic slowdown."
iPhone 5c (photo via businessinsider.com)
Apple’s 5c went on sale back in September. Apple’s 5s was released at the same time and they both hit 11 markets.
Apple says that it sold nine million iPhone 5's during its debut weekend. They did not break the sales totals down by models.
Both analysts and Apple executives caution against reading too much into company’s adjustments, which are common in the electronics industry.
Morningstar analyst Brian Colello says, "We're not especially concerned with 5c order cuts at this point because they appear to be offset by strong demand and increased production for the 5s. As far as emerging markets, the 5c is simply not cheap enough to gain traction with customers that can buy $150 Android (News - Alert) devices."
Apple will report its fiscal fourth quarter results later this month and investors will get some idea of the demand for the two phones then.
Edited by Alisen Downey
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