Best explanation I’ve seen so far of the details of Apple’s (AAPL) problems with the iPhoneX comes from KGI Securities analyst Ming-Chi Kuo. That report was summarized on MacRumors.com last night.
According to the KGI report, the biggest hurdle has likely been the flexible printed circuit board for the phone’s antenna. Initial supplier Murata of Japan has not been able to meet specifications due to the increased complexity of the phone’s antenna with the company saying it wouldn’t be able to resolve issues before the second quarter of 2018. The has led Apple to replace Murata, which had 60% of orders initially, with second source Carrier Tech. The KGI report says that it believes that Career Tech will be able to ramp up production in November.
A second bottleneck, according to the report is also related to the flexible printed circuit board but this time involves the wide-angle rear camera lens. Supplier Interflex has had quality issues with the part for the wide-angle lens.
In his report Kuo cut his estimates for iPhone X shipments for the fourth quarter to 25–30 million units, down from 30–35 million units and wrote that he expects that 2–3 million units will be shipped into distribution channels ahead of the November launch. As a result, initial supplies will be very tight . Kuo says shipments will “pick up markedly” in the first quarter of 2018.
Shares of Apple are up 0.93% as of 1 p.m. New York time today. The company reports earnings after the close on November 2.
