Apple cuts production of its new 5C phones

APPLE has told manufacturers of its new iPhone 5C that it will cut orders of the smartphone for the final three months of the year, a source familiar with the supply chain situation said.

Pegatron Corp, a major manufacturer of Apple’s new phone, had 5C orders reduced by less than 20%, the source said yesterday. Hon Hai Precision Industry, Apple’s other manufacturer of the 5C, has had its orders for the same period reduced by a third, the Wall Street Journal reported.

The 5C and 5S were launched last month ahead of the Christmas holidays, when sales tend to hit a peak. In the US, the 5C is $100 cheaper than the premium 5S, which retails for $649 for the 16 GB model.

The cut in 5C orders will reinforce investor sentiment that the phone was overpriced and would not be well received by consumers, some analysts say.

“This reflects a failure in Apple’s pricing strategy,” said Bevan Yeh, a Taipei-based senior fund manager at Prudential Financial Securities Investment Trust. “The price differentiation between 5C and 5S is too small. It’s an iPhone 5 with plastic casing and isn’t worth the price.”

Spokesmen at Pegatron and Hon Hai declined to comment, while Apple could not be immediately reached for comment.

In China, one of Apple’s most important markets according to CE Tim Cook, the 5C’s reception has been lukewarm.