Uh, no, they do not. You're spouting BS. If what you claim were true, no contractor would do business with Apple. Apple is well known for their just in time inventory control. Apple does not pad their orders. Apple pays for the equipment for the contractors' assembly lines and specialized manufacturing for their lines.
Why do companies accept the orders in the first place? Well, the first few who did got seriously burned. Now that price is built-in to the estimates so there is wiggle room when the inevitable slowdown comes, and those thousands of dedicated CNCs are sitting idle for 12 hours a day. That's already baked into the original price.
And you have to realize that companies do NOT make all their profit from sales of product; there are pretty hefty kickbacks from the Chinese Governments (Local, Provincial, and National) to keep employment high. So they aren't just for-profit organizations, they are also jobs programs.
Anyway, the overestimation of capacity is a well-worn game, used effectively time and again. And in light of Apple's continuing slide in overall market share it's not entire unexpected. Overestimate of production, or the ability to use 100% capacity for a short time (1 quarter or so) will become the norm. And supply chain managers in all organizations use excess capacity arguments to drive prices down - it's a very common technique.