Apple has allegedly cut its orders by roughly half in response to lower than expected sales of the iPhone 5 this quarter.
Japanese business news network Nikkei has reported that Apple has asked Japan Display, Sharp and LG Display to provide half the number of the 65 million pixel LCD panels it had originally required between January and March 2013.
Apple's shares have already dropped by four per cent since the report, as it appears to confirm claims already made by analysts in late December 2012 that the iPhone 5 has not sold as well as hoped for.
Apple has lost business to Samsung, in particular, and HTC in the past year. Even smaller companies, such as Huawei and ZTE, are starting to make in-roads into a market Apple once dominated.
High-performance smartphones are becoming more accessible at the lower end of the market, while top-specification phones from Samsung or HTC are still undercutting Apple, whose products carry a consistently higher price tag.
The news follows reports last week suggesting the company is planning a cheaper smartphone alternative to the iPhone aimed at emerging markets – something the company vehemently denies.
Apple has suffered a series of embarrassing mis-steps, most notably with the failure of its proprietary geolocation and mapping app that debuted with the iPhone 5.
Google Maps was quickly drafted back in as a replacement.