Apple suppliers slip on news of cut in orders for iPhone 5 parts

Sharp and other Apple suppliers declined in Asia trading after reports that orders for iPhone 5 parts had been cut about 50 per cent following lower-than-expected sales.

Sharp, which makes display panels for the iPhone 5, fell 2.7 per cent to close at ¥321 in Tokyo. Samsung Electronics, which supplies Apple and makes its own competing phones, declined 2.6 per cent in Seoul. Speaker-maker AAC Technologies Holdings dropped as much as 5.2 per cent in Hong Kong.

Apple hit an 11-month low in New York yesterday after the Nikkei report underscored concerns about iPhone 5 sales and the wider smartphone market. Former Apple chief executive also said today the company needs to develop cheaper phones to boost sales in emerging markets.

Slower iPhone demand "will inevitably have a negative impact on component suppliers," said Park Hyun, an analyst at Tongyang Securities in Seoul. "The center of growth in the market is moving toward the mid-end segment."

Apple intended to order parts for about 65 million iPhone 5s this quarter, Nikkei said, citing unidentified executives at parts suppliers. Steve Dowling, a spokesman for Apple, declined to comment.

The suppliers' declines today were limited by earlier reports the iPhone 5 was trailing sales targets and that Apple was cutting production, said Keita Wakabayashi, an analyst at Mito Securities in Tokyo. The phone maker cut production about 30 per cent last month, USB AG analyst Steven Milunovich wrote in a note yesterday.

"This is not entirely a new story," Mr Wakabayashi said. "That's why stocks aren't plunging dramatically."

Apple may have pared iPhone production to rebalance inventory or because of lower consumer demand, according to Mr Milunovich. Order cuts may also be due to suppliers becoming more adept at assembling the latest iPhone, reducing the need for excess inventory, he said.

Mr Milunovich's projection for 25 million iPhone 5 units to be sold in the quarters ending in December and in March will still be exceeded under the scenario Nikkei reported, he said.

* Bloomberg News