Apple cuts orders for iPhone 5 parts on weak demand: Nikkei

Mon Jan 14, 2013 1:50pm EST
 
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(Reuters) - Shares in Apple Inc dipped below $500 for the first time in almost one year after reports it is slashing orders for screens and other components as intensifying competition erodes demand for its latest iPhone.

Japan's Nikkei reported on Monday that the world's largest technology corporation began sharply reducing buying of liquid crystal displays about a month ago from suppliers like Japan Display Inc and Sharp Corp.

The report, later matched by the Wall Street Journal, comes as hard-charging rivals like Samsung Electronics, which makes phones based on Google Inc's popular Android software, continue to expand market share globally.

Apple stock slid more than 4 percent to an intraday low of $498.51 -- a level not seen since February 16, 2012 -- before bouncing back to trade just above $500 at midday. The news also hurt shares of suppliers such as Cirrus Logic Inc, which dived 9 percent.

Some analysts argued that Apple and its manufacturing partners had struggled with quality issues that might have curtailed production times.

"Our checks with supply chain contacts close to the situation identified a very different cause: a slower ramp in the manufacturing of iPhones and iPads (reflecting some quality control issues) and insufficient production lines," said Joane Feeney of Longbow Research.

"Rather than ordering more components and having inventory build up further, Apple put component suppliers on notice to hold off, for the time being, on further shipments until it expanded its production lines - which it plans to complete by the end of the quarter."

By some estimates, the holiday quarter may have been the worst for U.S. retailers since the 2008 financial crisis, with sales growth far below expectations. Other data yields a more mixed picture of holiday season demand.

Apple was not immediately available for comment. No one at Sharp was immediately available to comment on Monday - a national holiday in Japan - and parts suppliers to Apple in Taiwan declined to comment.   Continued...

 
A customer holds up an Apple iPhone 5 for the photographer during an exclusive sale by Belgian operator Mobistar in Brussels, in this file picture taken September 28, 2012. Apple Inc has almost halved its order with suppliers of LCD panels for the iPhone 5 in the current quarter due to weak demand, the Nikkei reported on January 14, 2013. REUTERS/Yves Herman/Files