UPDATE: Palm has not halted production. As per Engadget who spoke with Palm representatives, the company suspended production for the Chinese New Year.

There is a report out from OTR Global that three sources have confirmed that Palm has halted production of the Palm Pre, Palm Pre Plus, Palm Pixi and Palm Pixi Plus. According to BGR, one source was quoted as saying, “The decision is very sudden, and Foxconn was told to reduce all February Pre forecast to zero on Wednesday and nobody knows whether shipment will resume in March.”

Palm Inc. Alert
Palm Orders Production Halt of Pre and Pre+ in February
February 11, 2010
PALM, S, VZ, 2038 HK, 8078 TT
Sources: 3 sources Taiwan handset component supply chain (all repeats)
Key sources in the Taiwan handset supply chain said Palm Inc. has ordered assembler Foxconn International Holdings Co. Ltd. to suspend production of both the Pre and Pre+ in February. “The decision is very sudden, and Foxconn was told to reduce all February Pre forecast to zero on Wednesday and nobody knows whether shipment will resume in March,” said a key source. The source said the CDMA2000 Pre to Sprint and the CDMA2000 Pre+ to Verizon were affected.
Pixi Production Suspended Too?
One source said Palm also told Compal Communications Inc. to suspend shipment of the Pixi and Pixi+ in February, while another source said that production is still going ahead with the Pixi+ to Verizon, but actual delivery in February will amount to less than 5,000 units.
Reporter: Van Tran

Honestly, we’re not sure to what to make of the news. Even if new hardware were on the way, this seems pretty drastic. There were be plenty of speculation, but we’ll do our best to provide any news as it becomes available.

[via BGR]