Uncertainties for iPhone X production over 3-D sensor issues
Investors cool to the launch of Apple's iPhone 8 rang
TAIPEI - Apple is facing problems with the production of 3-D sensors for facial recognition for its premium iPhone X that is slated for shipping early November, although it is yet unclear the impact on supply.
Apple introduced facial recognition to unlock phones and for users to authenticate payments on their handsets for the first time with iPhone X. The new function is not available on the lower-priced iPhone 8 range.
However, iPhone X has been plagued by a number of production issues and its shipment date of Nov. 3 is much later than those of iPhone 8 and iPhone 8 plus, which are already in the market having been launched earlier this month.
Two executives working for iPhone suppliers told Nikkei Asian Review that 3-D sensor part makers are still struggling to reach a satisfactory level of output, and to boost their yield rate. This rate measures the number of usable or saleable units from a batch of components or final products produced. A low yield rate is likely to hurt a company's margins and bottom line.
Both sources were unable to offer clarity on whether Apple could meet large orders after iPhone X's launch. One of the sources said that iPhone X was being churned out in small quantities, around some tens of thousands daily.
Jeff Pu, an analyst at Taipei-based Yuanta Investment Consulting, also identified 3-D sensors as the only major issue left in the production of iPhone X.
He said that he expected mass production of iPhone X in the second week of October and that handsets would begin to leave China for global distribution a week later.
iPhone X is exclusively assembled by Hon Hai Precision Industry, or Foxconn Technology Group, at its factory in the central Chinese city of Zhengzhou.
According to Pu's estimate, Foxconn churned out 2 million units of iPhone X in September, and in October that number should rise to 10 million. He said that Foxconn would have assembled a total of 40 million iPhone X handsets by year-end, lower than his estimate of 45 million earlier this year.
"Supply will still be tight after Nov. 3," Pu said.
iPhone 8 suffers
With iPhone X still more than one month away from reaching consumers, initial appetite for iPhone 8 and iPhone 8 plus appears to be weak. The iPhone 8 range still sports liquid crystal display like previous Apple handsets, while iPhone X adopts an organic light-emitting diode screen that offers sharper color contrast.
Some recent reports suggest that the delayed shipment of the premium handset may have dampened demand as well.
One of the industry sources said that demand for iPhone 8 and iPhone 8 Plus appears to be weaker than that of their predecessors, but did not provide figures.
Amid muted reaction to the iPhone 8 range, shares of Apple and its suppliers have been hit in recent days.
Apple stock fell about 6% to close at $150.55 by Monday since it unveiled the new iPhones on Sep 12. Hon Hai, meanwhile, has lost some 11% since then and its smaller rival Pegatron has shed about 17%.
Both Apple and Foxconn declined to comment.