iPhone production could be cut by 40%

An analyst has claimed Apple may cut production of its iPhone device by up to 40% in the fourth quarter as consumer demand for high-end electronics falls as a result of the global financial crisis.

An analyst has claimed Apple may cut production of its iPhone device by up to 40% in the fourth quarter as consumer demand for high-end electronics falls as a result of the global financial crisis.

According to FBR Capital Markets, Apple is set to slash iPhone production by a significant amount in the lead up to Christmas – usually its best performing quarter by far.

“Previous checks indicated that iPhone production would fall about 10% sequentially in calendar fourth quarter,” FBR says, “(but) our new checks indicate that iPhone production could fall more than 40% sequentially in the fourth quarter.”

The move has struck some analysts as strange. Apple recorded a quarterly profit boost of 26% last month, largely due to sales of the 3G iPhone released in June. The computer giant has sold 6.89 million iPhones – beating rival Research in Motion’s BlackBerry.

Telecommunications research firm Telsyte principal analyst Warren Chaisatien says if the reports are true, he doesn’t see reduced production as a good move.

“The fourth quarter is usually a holiday shopping season, and considering their fourth quarter sales… I don’t believe that move will be beneficial to them.”

Chaisatien says it will likely have a negative impact on Apple’s market expansion. Undecided smartphone buyers will likely choose another product if an iPhone is unavailable, following the release of several smartphones in the last quarter.

“There are people considering moving to an iPhone, and usually the handset market is so highly competitive. Everyone is coming to compete in that market segment, and if a handset is not easily available, consumers are pretty fickle… they can switch and choose something else.”

Stuart Corner, telecommunications editor of IT news site ITWire, admits he hasn’t looked at the reports in detail but says slashed production is out of season, and could be “a reflection of the global economic situation”.

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