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Apple’s iPhone X Sells Out - Supply Chain Suggests Only Half Can Be Delivered In 2017

Launch day supply of Apple's iPhone X was exhausted in mere minutes after the handset went up for sale early today but Apple's supply chain is rumored to only get about 20 million units delivered before the end of 2017. By 24/7 Staff




As reported by AppleInsider, Apple's flagship smartphone went up for sale just after 12:01 a.m. Pacific on today, though only a lucky few were able to snag a copy before ship times began to slip beyond the scheduled Nov. 3 launch date.

As of 12:11 a.m., Apple's online store pegged shipments for most models at 2 to 3 weeks, an estimate that quickly rose to 4 to 5 weeks less than an hour later. As of 1:45 a.m. Pacific, shipping estimates stand at 5 to 6 weeks.

Prior to Friday's start to preorders, analysts warned stock on hand would be scarce. KGI's Ming-Chi Kuo, for example, said Apple will likely take receipt of a paltry 2 to 3 million units prior to the November debut.

That number is dwarfed by first weekend sales of iPhone 6 - arguably Apple's last "big" iPhone release - which stood at more than 10 million units.

A number of reports leading up to Friday's preorder round noted constrained the supply of key iPhone X components.

Supply chain suggests Apple will only get 50% of iPhone X deliveries for 2017

New reports from unnamed supply chain sources claim that difficulty in production of the Face ID sensor suite has held up production of the iPhone X so much, that Apple is only going to get about 20 million units delivered before the end of 2017.

The Nikkei Asian Review claimed in a report on Tuesday that "problematic parts" associated with Face ID are the culprit to fewer iPhone X for the fiscal year 2017. The report goes on to claim that OLED problems were wrapped up in July, with the face authentication system causing supply problems after that.

The account also alleges that improvements in yield of the sensors only increased towards the end of September. As a result, the unit is being produced at a rate of 10 million units per month - which leads towards the Nikkei Asian Review's prediction of 20 million.

However, the number seems to assume that Apple has only in the last few days started cranking out that volume, leading to that 20 million number.

Other reports from the supply chain in recent days have suggested that while the Face ID sensor was the culprit of slower than expected production, and that the issues were resolved in late September, Apple's manufacturers are expected to crank out 30 million to 35 million units before the end of 2017 - which makes more sense from a mathematical standpoint.

The publication gave itself an out, however. The report claims that Apple has already started negotiations with other manufacturers for "certain parts," and notes that there is a possibility that output volumes could increase rapidly.

Source: Mike Wuerthele, AppleInsider

 

Initially, Apple was seeing low OLED display yields, but those problems were supposedly rectified this summer. Later, rumors fingered the TrueDepth camera as a bottleneck. The advanced depth-sensing camera system requires parts that only a select few manufacturers can provide.

In particular, suppliers were supposedly having trouble producing TrueDepth's "Romeo" element, or the transmission module that includes a dot projector and flood illuminator. Romeo works in tandem with a "Juliet" reception module consisting of sensing elements like infrared and full-color HD cameras.

Read: Common Sales and Operations Planning Myths

Kuo believes flexible circuit boards are to blame for the holdup. Most constrained is the supply of iPhone X antenna FPCBs made by Murata and Career Tech, with wide-angle camera module FPCBs coming in second. Echoing reports from other outlets, Kuo said dot projectors are also in short supply. 

The analyst expects 25 to 30 million iPhone X units to ship in the fourth quarter, while the Nikkei Asian Review expects only 20 million to ship by the end of 2017.

Whatever the final tally, it is clear initial demand for iPhone X is far outstripping Apple's stockpile.

The company and its suppliers are working to solve production issues, with Kuo estimating a rapid increase in availability starting in early 2018.

For many customers eager to get their hands on Cupertino's latest gadget, that time can't come soon enough.

Related: The Two Levers of Inventory Optimization

The Two Levers of Inventory Optimization




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