Report backs up claims of slow 3D sensor production for Apple's iPhone X

AppleInsider

3D sensor suppliers for the iPhone X are "still struggling" to achieve significant output and improve yield rates, according to a report, which also reiterated expectations that the phone will be in very short supply.

Two executive sources with iPhone suppliers were "unable to offer clarity" on whether Apple will be able to meet demand after the phone's launch, Japan's Nikkei said on Tuesday. One of the people elaborated that daily iPhone X production is currently limited to the tens of thousands -- likely well below what the company will need to satisfy global demand.

The claims echo ones made on Monday by KGI Securites analyst Ming-Chi Kuo, who said that the iPhone X's TrueDepth camera would create an obstacle to mass production.

Apple may be having trouble in general, as DigiTimes claimed that the company has asked suppliers to slow down parts shipments to 40 percent of the quantities originally planned. Nevertheless, some suppliers -- possibly the 3D sensor makers -- are allegedly having a hard time meeting even that quota, owing to yield rates.

The iPhone X is believed to be a difficult device to make, owing not just to the TrueDepth camera used for features like Face ID and animoji, but its edge-to-edge OLED display, interrupted by a "notch" for TrueDepth. Samsung is thought to be the product's only display supplier, being the one company with enough OLED capacity.

Preorders for the phone start on Oct. 27 ahead of a Nov. 3 launch. Some analysts, including Kuo, have suggested that mass production might only start in mid- to late October.

80s_Apple_Guy

If true this is a mistake on Apple's part IMO. If they couldn't get the parts in sufficient quantities they should have gone with alternate tech till it was ready.  I get lower demand means better pricing and interest however if a large majority or even most people can't get the phone until several months into next year that's going to get a lot of people angry. 

maestro64

80s_Apple_Guy said:

If true this is a mistake on Apple's part IMO. If they couldn't get the parts in sufficient quantities they should have gone with alternate tech till it was ready.  I get lower demand means better pricing and interest however if a large majority or even most people can't get the phone until several months into next year that's going to get a lot of people angry. 

Ah, what alternate tech are you recommending they go to. This is tech I believe Apple via some of its acquisition developed which is the reason it works.

maestro64

But wait, everyone was saying for months it was the OLED display which would be the gating item. another example of some rumor supply constraint and people assumed it had to be the display.

flaneur

80s_Apple_Guy said:

If true this is a mistake on Apple's part IMO. If they couldn't get the parts in sufficient quantities they should have gone with alternate tech till it was ready.  I get lower demand means better pricing and interest however if a large majority or even most people can't get the phone until several months into next year that's going to get a lot of people angry. 

I'd say it was a risky move, and it may constrain sales, but it's way too soon to say it was a mistake. That depends on the outcome months from now. And Apple is always doing risk-prone moves like this. It's what make their products so desirable.

StrangeDays

80s_Apple_Guy said:

If true this is a mistake on Apple's part IMO. If they couldn't get the parts in sufficient quantities they should have gone with alternate tech till it was ready.  I get lower demand means better pricing and interest however if a large majority or even most people can't get the phone until several months into next year that's going to get a lot of people angry. 

That would be a terrible idea. Alternative tech = iphone 8. The entire point of the X is this hardware. Selling what you can make now is a better option than waiting even longer, as we saw with AirPods. Waiting means not selling, not earning. “I want my boys earning!”. So what if some early adopters feel entitled to Day 1 and  have to wait longer...world turns. 

ben20

That is so cool how they get exact data! However I strongly doubt it....FAKE NEWS!

80s_Apple_Guy

flaneur said:

80s_Apple_Guy said:

If true this is a mistake on Apple's part IMO. If they couldn't get the parts in sufficient quantities they should have gone with alternate tech till it was ready.  I get lower demand means better pricing and interest however if a large majority or even most people can't get the phone until several months into next year that's going to get a lot of people angry. 

I'd say it was a risky move, and it may constrain sales, but it's way too soon to say it was a mistake. That depends on the outcome months from now. And Apple is always doing risk-prone moves like this. It's what make their products so desirable.

I get that it makes the product more desirable. However, there is a balancing act to that. If too few people can get them in a reasonable time frustration becomes more prevalent than desire. If many deliveries are delayed so people aren't getting the phone till halfway to the next iPhone release in Sept 18 that's gonna be pretty bad. Again, I said IF. 

80s_Apple_Guy

StrangeDays said:

80s_Apple_Guy said:

If true this is a mistake on Apple's part IMO. If they couldn't get the parts in sufficient quantities they should have gone with alternate tech till it was ready.  I get lower demand means better pricing and interest however if a large majority or even most people can't get the phone until several months into next year that's going to get a lot of people angry. 

That would be a terrible idea. Alternative tech = iphone 8. The entire point of the X is this hardware. Selling what you can make now is a better option than waiting even longer, as we saw with AirPods. Waiting means not selling, not earning. “I want my boys earning!”. So what if some early adopters feel entitled to Day 1 and  have to wait longer...world turns. 

Waiting works to a point. If a lot of people aren't getting phones till halfway to the next iPhone that's going to be bad for Apple. Again this is all IF. I know thumbprint ID would be a step back even though it would be OLED and minimal (as possible) bezels. Again though if they frustrate everyone cause their delivery date is months out I'm not sure how well that will go over

gregg thurman

80s_Apple_Guy said:

If true this is a mistake on Apple's part IMO. If they couldn't get the parts in sufficient quantities they should have gone with alternate tech till it was ready.  I get lower demand means better pricing and interest however if a large majority or even most people can't get the phone until several months into next year that's going to get a lot of people angry. 

"One of the people elaborated that daily iPhone X production is currently limited to the tens of thousands"

Just how many are "tens of thousands"?  Is it 30,000, 50,000 or 170,000?  I haven't seen any analyst lowering their FQ1/2018 iPhone X estimates in the last several weeks.  Current consensus is ~10,000,000.

Ten million equates to ~170,000 units per day.  I point this out because 170 thousand is NOT hundreds of thousands (its less than TWO), ergo it must be considered tens of thousands.

Stating that production remains in the tens of thousands is too broad a range to call it a production failure.

gregg thurman

The thought just occurred to me that these manufacturers are in production, so instead of using 59 selling days (from launch to end of quarter), I should have used, at minimum, 90 component production days for the quarter.  That lowers average units produced to yield 10,000,00 iPhone Xs sold in the December quarter to ~110,000.  And that's a static average.  I can't believe that competent manufacturers won't be able to significantly improve production efficiencies over a three to four month period.

This report, like virtually all supply constraint reports, doesn't stand the test of closer scrutiny.

80s_Apple_Guy

gregg thurman said:

The thought just occurred to me that these manufacturers are in production, so instead of using 59 selling days (from launch to end of quarter), I should have used, at minimum, 90 component production days for the quarter.  That lowers average units produced to yield 10,000,00 iPhone Xs sold in the December quarter to ~110,000.  And that's a static average.  I can't believe that competent manufacturers won't be able to significantly improve production efficiencies over a three to four month period.

This report, like virtually all supply constraint reports, doesn't stand the test of closer scrutiny.

The ONLY reason this report stands up better than all the other garbage we've seen before is that Apple has never had to delay a phone release for over a month before. Actually the only other time was the white iPhone 4 which had major production issues that took months to fix. 

gmgravytrain

A report backs up claims? I'm sorry, but I don't believe any of those sources have an exact handle on how many iPhone Xs are being produced each day. Besides, one can ever tell when the component manufacturer can start to increase yields. It could happen in a month or it could happen in a week. I honestly don't see the point of these advance reports. We won't know for certain until the iPhone X becomes a retail product. I don't think it matters if Apple doesn't meet the quarterly deadline Wall Street sets for the number of iPhones being sold. If they don't make it this quarter, they can likely make up for it in the next quarter. It has no bearing on me as a shareholder as I'm in it for long-term Apple ownership.

Trading stocks on a quarterly basis must be something the hedge funds do. I'm more interested in YOY sales because that's how most businesses are valued. Letting financial quarters set the value of a company can be quite disastrous. Anything can throw numbers off. Bad weather, natural disaster or terrorist attack could ruin a quarter. I personally think people are being paid to make up fictitious stories surrounding Apple's iPhone sales. Every year they claim Apple is having component supply problems but it doesn't seem to impact iPhone sales to any great degree. People who want iPhones will likely wait until the supply is available.

However, I am ready to believe that China iPhone sales will be weak due to Chinese consumer trends of buying mid-range smartphones instead of iPhones. I think the Chinese are smart to buy what they can easily afford and still get full use of their smartphones. I'm glad if Apple is pushed into relying less on iPhone sales and has to make revenue in another way.  The sooner Apple can become less of a one-trick-pony to Wall Street, the better I'll feel as a shareholder.  Depending only on iPhone sales makes the company seem too fragile, from my perspective.

SpamSandwich

Rampant speculation.

gregg thurman

gmgravytrain said:

I personally think people are being paid to make up fictitious stories surrounding Apple's iPhone sales. Every year they claim Apple is having component supply problems but it doesn't seem to impact iPhone sales to any [measurable] degree.

I don't like conspiracy theories, but in this case I am in total agreement with you.  You can almost set your watch by the timing of these unsubstantiated, never held accountable, rumors (I can't bring myself to call them "reports").

maestro64

80s_Apple_Guy said:

StrangeDays said:

80s_Apple_Guy said:

If true this is a mistake on Apple's part IMO. If they couldn't get the parts in sufficient quantities they should have gone with alternate tech till it was ready.  I get lower demand means better pricing and interest however if a large majority or even most people can't get the phone until several months into next year that's going to get a lot of people angry. 

That would be a terrible idea. Alternative tech = iphone 8. The entire point of the X is this hardware. Selling what you can make now is a better option than waiting even longer, as we saw with AirPods. Waiting means not selling, not earning. “I want my boys earning!”. So what if some early adopters feel entitled to Day 1 and  have to wait longer...world turns. 

Waiting works to a point. If a lot of people aren't getting phones till halfway to the next iPhone that's going to be bad for Apple. Again this is all IF. I know thumbprint ID would be a step back even though it would be OLED and minimal (as possible) bezels. Again though if they frustrate everyone cause their delivery date is months out I'm not sure how well that will go over

Nothing is ever bad for apple, Apple is one of the few company who does not have to worry about perishable demand, meaning that if Apple does not have the product on the shelf user will go elsewhere. Apple users will wait and always have waited to get what they want. In Apple case scarcity is a good things, it make it all that much more desirable.