NAR: Apple drops iPhone parts orders by 20%; supplier stocks dip

"This news needs to be viewed in the context of Apple probably being overly optimistic last year in relation to the prospects for its new phones, leaving it with excess inventory in the first part of this year", Atlantic Equities analyst James Cordwell said.

Apple shares fell as much as 2% in trading Friday and closed down about 1%. In March, Morgan Stanley said it expected more than half of Apple's revenue growth over the next five years to come from services.

The publication has warned that its sources in the Asian supply chain say Apple has asked its supply chain partners to prepare around 20% fewer components for the new iPhones expected in 2018 than they did in 2017.

Apple did not immediately respond to a request for comment. US -based suppliers Advanced Micro Devices, Micron Technology Intel, Broadcom Inc and Qualcomm Inc were all down between 1 percent and 3 percent. Analysts suspect that the $1,000 iPhone X may be hurting demand, even though it was the best-selling smartphone in early 2018.

"For the three new models specifically, the total planned capacity could be up to 20 percent fewer than last year's orders". The iPhone X's high starting price of $999 has enabled Apple to hit record average selling prices for iPhones, and reports have conflicted about whether this year's top models will be equally or less expensive.

The report suggests Apple is moving aggressively to make both of those models and a Plus-sized version of the iPhone X available in September, solving touch and depth-sensing screen production issues that were said to be endangering the launch of the lowest-cost model.

Apple reported iPhone unit sales of 52.2 million in its most recent quarter, slightly below the Thomson Reuters consensus estimate of 52.3 million.

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