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Tuesday, October 27, 2009, 06:50 am PT (09:50 am ET)

Apple increases holiday quarter iPhone orders by 20 percent

Demand for the iPhone 3GS this holiday season is expected to cause a shortage of image sensors, as Apple has increased orders for parts for its handset by 20 percent.

According to Taiwanese trade publication DigiTimes, OmniVision Technologies, the manufacturer of CMOS image sensors used in the iPhone 3GS, has warned its clients that there will be a limited supply of hardware during the holiday season. Supply constraints are pinned chiefly on demand for the iPhone 3GS, and are not expected to relax until late November.

"Apple has increased fourth-quarter orders for the iPhone 3GS to its Taiwan-based manufacturing partners Foxconn Electronics (Hon Hai Precision Industry) and Primax Electronics by 17-20%, noted the sources," the report said.

Apple officials said in the company's fourth quarter earnings call that they intend to meet overwhelming demand for the iPhone 3GS in the coming holiday season.

"I was really happy that we were able to solve the bulk of these (supply issues), the vast majority of them in September or in early October," Apple executive Tim Cook said during the company's quarterly conference call. "So I feel good about how we're positioned now."

Though supply constraints for the device were an issue during the September quarter, the Cupertino, Calif., company still managed to sell a record 7.4 million iPhones.

"For much of the quarter, most of the countries where we're selling the iPhone 3GS was in very low inventory as demand outstripped the supply," Cook said.

he was reluctant to make any seasonal forecasts for iPhone sales publicly, noting that Apple is still new to the handset business. In addition, he said significant growth of the platform year-over-year has made predicting even more difficult.

"The things that we look at in terms of coming up with our forecasts would be the popularity of the iPhone 3GS has been phenomenal," he said. "We were very surprised by the demand. We were selling in 64 countries by the end of the quarter. We'll roll out some others this quarter, notably China."

In addition to the debut of the handset on China Unicom, Apple is also expanding the iPhone to multi-carrier agreements in numerous countries. In the U.K., wireless carrier Orange will offer the iPhone starting Nov. 10, and Vodafone is set to follow in early 2010. In Canada, carriers Bell and Telus Corp. are also set to begin selling the device in November.