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Report: Apple Cuts Orders for iPhone Replacement Parts

14 Jan, 2013 By: Erik Gruenwedel

iPhone 5

Samsung’s emergence as top smartphone provider seen as primary cause

Apple has reportedly streamlined orders to vendors supplying parts to the iPhone, suggesting consumer demand for the iPhone 5 is weaker than expected.

Cupertino, Calif.-based Apple, of course, created the smartphone market with the June 29, 2007, launch of the iPhone — a mini computer and digital camera ensconced within a mobile phone. Subsequent editions of the phone (and April 3, 2010, bow of the iPad tablet) have been met with strong consumer demand — singularly transforming the consumer electronics industry.

Yet, orders for iPhone 5 screens through March have waned, falling about 50%, according to The Wall Street Journal, which cited people familiar with the situation. The iPhone 5, which is the sixth generation of the iPhone and succeeds iPhone 4S, was launched Sept. 12, 2012.

Leapfrogging Apple last year in the smartphone market was Samsung, which markets a series of similar (and less expensive) phones using the Google-based Android operating system.

Research firm International Data Corp. said Apple generated 14.6% of global smartphone shipments in the third quarter, compared with 23% in the fourth quarter of 2011 and the first quarter of 2012. Meanwhile, Samsung’s market share climbed 31.3% in the third quarter of 2012, compared with 8.8% in the third quarter of 2010.

Analysts contend Apple over-ordered the iPhone 5, including replacement parts, when the device was launched, which, when combined with lagging demand, triggered the cutbacks.

"It is unlikely that Apple is cutting orders in a 'great' demand environment," Citigroup analysts said in a note released last month.

The news sent Apple shares down 3% in midday trading.

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