TAIPEI/BEIJING — Apple is cutting production orders for its plastic-backed iPhone 5C a month after launch, a source familiar with its supply chain said Wednesday, fueling speculation the cheaper model of its main gadget might have been priced too high.
Apple has asked one of its largest suppliers to increase production of the top-tier 5S, which went on sale at the same time, the Wall Street Journal reported. An analyst said this allayed concerns that the cheaper 5C will eat into premium sales and erode margins.
Apple has told manufacturers it will reduce orders for the 5C smartphone in the final three months of the year, the source told Reuters. The company added the 5C to the lineup in September along with the flagship iPhone 5S.
Pegatron Corp., which assembles many of Apple’s iPhone 5Cs, had seen orders reduced by less than 20 percent, said the source, who asked not to be identified because the information is sensitive.
Hon Hai Precision Industry Co., another major assembly contractor for the 5C, had its orders for the same period reduced by a third, the Wall Street Journal reported.
But at the same time, Apple raised orders for the 5S in the fourth quarter, the newspaper said, quoting two Hon Hai executives.
Analysts said the decision by consumers to spend more on the pricier 5S benefits Apple. The company’s shares rose on Wednesday, touching a one-month high above $502. Canaccord Genuity analyst Michael Walkley estimated that the iPhone 5S is outselling 5C by a ratio of 5-2.
Canaccord Genuity’s “survey work indicates a significantly higher sell-through mix of iPhone 5s versus 5c that should benefit near-term Average Selling Prices and margins,” Walkley said.
In the United States, the 5C is $100 cheaper than the premium 5S, which starts at $649 for the 16 GB model.
Spokespersons at Pegatron, Hon Hai and Apple declined to comment.
Analysts and Apple executives have cautioned against reading too much into supply chain adjustments, which are common in the fast-moving electronics industry. Investors will get some idea of the demand for the two phones when Apple reports its fiscal fourth-quarter results later this month. But the iPhones numbers from July-September will include sales of only a month of the new models.