Apple Curbing iPhone 5C Production: Report

A new report in The Wall Street Journal suggests that Apple is slowing production of the plastic-bodied iPhone 5C.

According to the newspaper’s unnamed sources, Apple has asked two Taiwan-based manufacturers, Pegatron and Hai Precision Industry, to cut orders by 20 percent and 30 percent, respectively. That’s in addition to a prominent component supplier cutting orders for iPhone 5C parts by 50 percent.

Does that mean iPhone 5C sales are weak? The Journal acknowledged that “component orders don’t correlate directly with end demand,” and that Apple “has also previously cut component forecasts to suppliers over the past years.” In recent weeks, however, retailers in China and the United States have slashed the sale price of the iPhone 5C—Wal-Mart sells the device for $79 with a two-year contract, for example—which could be an indicator of weaker-than-expected demand.

Apple claims it sold roughly 9 million iPhone 5S and iPhone 5C units during the first weekend of the smartphones’ release, but has declined to break out sales numbers for each device. While some analysts believed that Apple had managed to produce no more than 5 million iPhone 5S units before the release weekend, it’s possible that the company actually manufactured far more, and that the higher-end device was responsible for the bulk of those 9 million units sold; recent reports suggest that the iPhone 5S continues to outsell the iPhone 5C by a healthy margin.

Why would the iPhone 5C suffer from anemic sales? That’s a multi-billion-dollar question, and the answer may rest with its unsubsidized price of $550—pretty steep for a device that’s essentially last year’s hardware in a plastic shell. Those with the cash—Apple fans, nouveau riche in developing nations such as China, and pretty much anyone who wants to stick with Apple for their next smartphone upgrade—might be inclined to spend a bit more in order to secure the top-line iPhone 5S, rather than be seen walking around with its lower-tier (and for some, obnoxiously bright-colored) sibling. Meanwhile, those on a tighter budget (particularly those in countries without a tradition of subsidizing phones with a two-year contract) might opt for a cheaper phone running Android in place of the somewhat-expensive iPhone 5C.

In other words, it’s likely that the iPhone 5C finds itself trapped in an uncomfortable position between the iPhone 5S and the galaxy of cheap Android devices: too expensive for bargain hunters, but too cheap and underpowered for those buyers in the market for an Apple product.

 

Image: Apple

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