Apple cuts iPad supply chain orders by 25%, say analysts

Apple has reportedly begun cutting component orders with vendors in the Far East for its iPad tablet, an action that is expected to slow sales for companies in its supply chain, JPMorgan Chase & Co said in a report.

According to reports, a number of supply-chain vendors have indicated that in the past two weeks Apple has slashed its orders for iPad components by a quarter, which is said to be the first cut that analysts at JPMorgan’s electronic manufacturing services team in Hong Kong say they have ever witnessed.

Bloomberg reports:

For a vendor such as Hon Hai, that could mean a drop to 13 million units in the fourth quarter, from 17 million units in the third quarter, JPMorgan analysts wrote in the Sept. 25 report. The report said JPMorgan U.S. analyst Mark Moskowitz, who covers Apple, does not expect to lower his projection of 10.9 million to 12 million units of iPad shipments in the third and fourth quarters after the supply chain adjustments.

It had been reported that Apple would launch the iPad 3 in the fourth quarter, delivering a tablet with a faster A6 processor and a Retina Display. However, reports have indicated that Apple has finalised its iPad 3 supplier list, retaining many of its key partners in the iPad 2 supply chain, and will begin production of its next generation tablet device in October.

Apple’s contract manufacturers in the supply chain were said to be ready to supply components, with the Cupertino-based company likely to retain LG Display as its main display panel supplier, dumping Samsung and adding Sharp, while Hon Hai (Foxconn et al.) is to continue handling assembly of the highly sought after device.

It is not known whether the cut in orders signals a move towards the production of a new iPad, although it could certainly be speculated. Reports may suggest that iPad orders may have slowed but with Apple confirming it is selling every iPad it receives, we believe that not to be the case – at least for now.

Neither Apple or Hon Hai (owners of Foxconn, one of the Cupertino-based company’s biggest suppliers) have returned calls for comment.