(Adds details from Jefferies note on suppliers, background, updates shares)
By Himank Sharma
Dec 14 (Reuters) - Apple Inc shares fell 3.9 percent on Friday after the iPhone 5 debuted in China to a cool reception and two analysts cut shipment forecasts.
Jefferies analyst Peter Misek trimmed his iPhone shipment estimates for the Jan-March quarter, saying that the technology company had started cutting orders to suppliers to balance excess inventory.
Shares of Apple suppliers Jabil Circuit Inc, Qualcomm Inc, Skyworks Solutions Inc, TriQuint Semiconductor Inc, Avago Technologies Ltd, and Cirrus Logic Inc also fell in early trading.
Apple shares have lost a quarter of their value since they hit a life high of $705.07 on Sept. 21, as it faces increasing competition from phones using Google Inc's Android operating system.
Misek cut his first-quarter iPhone sales estimate to 48 million from 52 million and gross margin expectations for the company by 2 percentage points to 40 percent.
UBS Investment Research cut its price target on Apple stock to $700 from $780 on lower expected iPhone and iPad shipments for the March quarter.
The brokerage said it was modelling more conservative growth for the world's biggest technology company after making supply chain checks that revealed that fewer iPhones were being built.
"Some of our Chinese sources do not expect the iPhone 5 to do as well as the iPhone 4S," UBS analyst Steven Milunovich wrote in a note to clients.
Apple launched the iPhone 5 in China on Friday, a move widely expected to bring the Cupertino-based company some respite from a recent slide in market share in China, but early reports indicated that demand may not be as great as expected.
"The iPhone 5 China launch has been surprisingly muted but (we) are unsure how much weather (snow) or the required pre-ordering (to prevent riots) are factors," Misek said.
Apple shares fell as low as $508.50 in morning trading on the Nasdaq on Friday. (Editing by Supriya Kurane)