Apple's iPhone 5C Orders rumored to be cut as Pegatron's Profits Disappoint
Pressure on iPhone 5C margins and rumors of alleged order cuts for Apple’s new plastic-backed handset have caused concerns for Pegatron, whose revenues were pushed last quarter due to the device. Pegatron reported lower-than-expected third-quarter net profit recently as costs associated with the ramp-up in production of the iPhone 5C affected the company’s bottom line. For those of you who didn’t already know, although Foxconn has been Apple’s primary assembly partner for years, Pegatron has nudged its way in with contract to build both the iPhone 5C and the iPad mini.
Two different major news organizations which were reporting on Pegatron’s earnings both cited unnamed sources as saying that Apple has cut orders for the iPhone 5C. The new plastic iPhone model as supposedly seen “weak sales” since its launch in September, according to The Wall Street Journal
, which has apparently led Apple to raise orders of the iPhone 5S through assembly partner Foxconn. Separately, Reuters
also reported that Pegatron has been affected by “order cutbacks” for the iPhone 5C. The alleged reductions were prompted by “less-than-stellar sales,” the report said, and have left market watchers concerned about Pegatron’s prospects for the end of 2013.
News of weak iPhone 5C sales aren’t new, though it’s possible that order revisions through Pegatron could have another explanation. It was previously reported that Apple is actually adding new suppliers for both the iPhone 5C and iPad mini to boost production in 2014. Specifically, Taiwan-based contract manufacturer Wistron and Compal Communications are expected to join Foxconn and Pegatron has assemblers.
Speculation regarding iPhone 5C sales are partially driven by the fact that Apple hasn’t broke down sales figures for specific models, citing competitive reasons. The iPhone 5C and iPhone 5S both went on sale the same day in September and reached sales of 9 million units in their first three days of availability. Some market watchers believe the success of Apple’s iPhone 5C lies in the long run, as early adopters are more likely to buy Apple’s flagship iPhone 5S. The belief is that casual smartphone buyers, who may not feel a need to upgrade as soon as Apple launches a new handset, will be drawn to the five color options available in the iPhone 5C lineup.
, The Wall Street Journal