Apple supposedly cut its fourth quarter orders for iPad components by 25%, according to a report from Bloomberg. This adjustment may have a financial effect on suppliers and manufacturers like Foxconn, but may not hurt Apple. Some analysts, like Mark Moskowitz of JPMorgan, are not adjusting their outlook and still expect Apple to sell 10 to 12 million iPad units in the last two quarters of 2011.
Before customers begin to panic about reduced inventory and product shortages, some analysts believe this reduction was part of Apple's strategy to compete with other tablet manufacturers. In this scenario, Apple ordered high and locked up suppliers and manufacturers so their competitors would be at a disadvantage. Now that this quarter is approaching, the Cupertino company is adjusting its orders down to a lower level.
Other analysts believe Apple is responding to weakening demand for the iPad and global economic conditions. Analyst Wanli Wang of RBS Asia Ltd., says, "It's back to reality. Now it seems even for Apple, due to the market situation, we need to be conservative." It's also possible Apple is cutting production in advance of the iPad 3 launch early next year. It may also be shifting some of its manufacturing to Brazil.