FBR Capital Markets analyst Craig Berger has stated in his research notes that Apple will be significantly cutting back its iPhone production by as much as 40 per cent in Q4.

The Cupertino-based company was already predicted to slash its production output by 10 per cent after selling nearly seven million handsets in Q3, but the report hints at a much larger figure.

It's not yet known how much inventory Apple has built up after the successful debut of the iPhone 3G, which far exceeded the sales of the original iPhone.

Slashing production

But given the high cost of the must-have handset, it appears some consumers might be watching the pennies meaning Apple has reacted by slashing production.

TG Daily notes Apple may have just over-produced in Q3 when the new handset was released, in an effort to stock global supply channels, and that would mean the cut would be a way of balancing inventory.

However, given the limited availability of the handset when launched, coupled with the likely strong demand over Christmas, this may not be the case.