Apple Slows iPhone Production as Samsung Galaxy S Sales Soar

Apple (NASDAQ: AAPL) reportedly has pared its Q1 orders for iPhone 5 parts owing to weaker than expected demand, according to two published accounts, at the same time as arch rival Samsung disclosed that cumulative sales of its Galaxy S device, on the market since May 2010, hit the 100 million unit sales mark. Apple’s stock fell 3.6 percent to just above $501.75 on the news.

Both the Wall Street Journal and Japan’s Nikkei, citing sources, reported that Apple has cut in half orders for iPhone screens for the first quarter from LCD panel suppliers Japan Display, LG Display and Sharp from an initial plan of 65 million units. Orders for other components for the iPhone 5 also have been sharply lowered, the reports noted. According to the WSJ’s account, Apple told the manufacturers last month of the changes in order volume.

Explanations for Apple’s slimmed down orders zeroed in on increased competition from Samsung and other Google (NASDAQ: GOOG) Android-based devices as the culprits. Seasonal fluctuations in demand always are a popular cause and received its due here as well. It may well turn out, however, that Apple simply needs more markets for the iPhone than it currently commands to withstand the ebb and flow of demand, no matter what the cause. As such, chief executive Tim Cook’s recent visit to China, ostensibly to take yet another run at hashing out a deal with China Mobile, could be just the tonic the vendor needs, especially considering the carrier is China’s largest with some 700 million subscribers but isn’t contracted to sell Apple’s smartphones.

By contrast, Samsung used the day to announce that sales of its flagship Galaxy S line have reached 100 million units since hitting the market in May 2010, driven by the Galaxy S III, which averages daily sales of 190,000 units and the Galaxy S II, with 40 million units sold in 20 months. In a message posted on its Flickr page, Samsung said the Galaxy S III is “selling at much faster rate of 30 million in 5 months and 40 million in 7 months, after becoming a million seller in only 50 days after its release last May.”