According to recent reports (via 9to5Mac), Foxconn cut back on iPhone 4 shipments during the month of August. This, reports say, is likely in preparation for the iPhone 5 launch.
It’s also likely that they have started manufacturing the iPhone 5 as well in order to have units stocked up for the release in October. Currently, the GM version of iOS 5 is scheduled to arrive by the end of the month. We have also learned that iOS 5 may arrive around October 10th.
This all seems like perfect timing for a mid-October launch of the next iPhone, which, according to the Wall Street Journal, arrives around mid-October.
If the iPhone 5 is in fact ready for release in October, it makes sense that iPhone 4 shipments would decrease. Keep in mind, though, that we have read reports saying that the iPhone 4 may be somewhat rebranded as the low-cost iPhone with an 8GB storage capacity, also from the Wall Street Journal report linked above.