Apple Cuts iPhone 5C Production (Report)

Apple
Apple's iPhone 5C

Sources close to the company's two Taiwanese assemblers say it is reducing orders of the lower-cost iPhone by 20 to 30 percent for the fourth quarter.

Apple is cutting back production of its lower-cost iPhone 5C for the fourth quarter, according to sources close to the two Taiwanese companies that assemble the devices. The news gives ammunition to analysts who questioned the company's pricing strategy for the new addition to the iPhone line.

The colorful, plastic encased iPhone 5C debuted in September along with the high-end iPhone 5S, which costs $100 more and comes with the fastest mass-market smartphone chips to date, along with a fingerprint sensor. 

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Apple told its Taiwanese assemblers Pegatron Corp. and Hon Hai Precision Industry Co. that it would be cutting shipments of the iPhone 5C in the fourth quarter, sources told the Wall Street Journal.

Pegatron, which the Journal says assembles two thirds of Apple's iPhone 5Cs, was told orders would be cut by less than 20 percent. Hon Hai, which assembles the rest of Apple's 5Cs, was told its orders would be reduced by a third.

Prior to Apple's iPhone release event in September, investors had been anticipating, and arguing for, the company to release a lower-cost model -- with a price tag around $350 -- to compete in developing markets such as China, where the company has been losing market share because many consumers don't have the disposable income for its "affordable luxury" class products. The iPhone 5C was the company's answer to this demand, but analysts were disappointed by the $550-plus price point. 

Consumer demand for the gold version of the 5S, however, has outstripped expectations, leading Apple to increase orders for that model.  

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