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Top Apple Supplier Cuts Hours As iPhone Fears Rattle Investors

Foxconn, which assembles most of Apple's latest iPhones, will cut working hours over the week-long Lunar New Year holiday, a person familiar with the matter told Reuters, in a rare move that analysts interpreted as a sign of softening demand.

Reports of slowing shipments and mounting inventories of the iPhone 6S and 6S Plus, as well as tepid forecasts from suppliers, have pushed Apple investors into unfamiliar territory after years of booming sales and surging shares.

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Earlier on Wednesday, Japanese daily Nikkei, citing parts suppliers, said output of the models would be cut by about 30 percent in January-March so dealers could unload stock. Apple shares lost 2.5 percent, and those of suppliers similarly fell.

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"Chinese New Year is a big holiday and there is usually overtime for workers. But this year, Foxconn will have a normal break," the person said, referring to the Lunar New Year which falls on Feb. 8.

Taiwan-based Foxconn, formally known as Hon Hai Precision Industry Co Ltd, assembles the latest iPhones at factories in China where it employs hundreds of thousands of people, and offers incentives such as triple overtime pay over China's biggest holiday.

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Foxconn said in a statement that it was "in the midst of planning operational schedules for the Lunar New Year holiday," but gave no details. Apple was unavailable to comment.

The person with knowledge of the matter was not authorized to speak with the media so declined to be identified.