Speculation is mounting that Apple may have pulled the plug on the October launch of their new iPhone 5 due to “significant production issues”.The iPhone 5 which was due to be launched on the 15th of October is now tipped to be replaced by a new low end iPhone 4

9 to 5 Mac’s sources say the true fifth-gen iPhone is experiencing significant production issues and may well be delayed and/or initially in short supply.

According to the source Apple is on track with the entry-level model. The company apparently plans to have over 10m of the handsets ready at launch, expecting strong demand for a cheaper model that will appear on prepay and postpay plans. That could well be the model tipped to be rolling off production lines at a rate of 150,000 units per day.

Slashgear said that the more interesting device – and the one which departs significantly from the current smartphone – isn’t going quite to plan.

Expected to be thinner than the iPhone 4, with a teardrop-shaped profile and a larger display, “impossibly light” but sturdier than the Samsung Galaxy S II, and rivaling point-and-shoot cameras with its photo skills, all that “magic” has supposedly given at least one of Apple’s production lines a headache. It’s unclear whether that’s at Pegatron or Foxconn facilities at this stage, but the net result is that supplies are more constrained than Apple had expected.