With iPhone 8 now on sale, all eyes are on the upcoming iPhone X. A morning report from KGI reiterates production issues we’ve been hearing about the iPhone X, indicating that only 2-3 million units will be shipped for sale before the launch on November 3rd (preorders open a week from today).

KGI points to supply shortages for several components including circuit boards for the iPhone X antenna and wide angle camera, and the depth-sensing Infrared dot projector.

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We’ve seen many publications suggest that Apple suppliers are facing difficulties ramping production of the iPhone X. In many aspects, the phone features radical redesigned parts which have not been mass-produced at scale before, so poor initial yields are somewhat to be expected.

Several reports in the past have said the 3D sensor production is the reason for the holdup; today’s KGI report mentions the dot projector but says there are other components in even shorter supply to be aware of.

Ming-Chi Kuo says the ‘biggest hurdle’ for iPhone X shipments is actually the flexible printed circuit board for the antenna system. He says special materials, processes and stringent tests are required for Apple to sign off on produced iPhone X antenna components, with much higher specifications than iPhone 8 or other models.

One supplier, Murata, was originally planned to satisfy most of the orders for the antenna PCB but has failed to meet Apple’s requirements. As such, another supplier is now believed to be manufacturing all antenna boards for the first few months.

The wide angle camera circuit board is considered the next biggest bottleneck in the report. KGI says that Apple’s camera system for iPhone X uses separate PCBs for the telephoto and wide angle lenses, which is unlike designs from Samsung phones. As such, it appears suppliers have hit issues manufacturing the ‘unique’ boards at volume.

Regarding the dot projector, KGI says previous problems relating to detection of human faces in certain conditions have now been resolved and shipments are set to ramp up significantly.

Given that Apple usually sells more than ten million phones in opening weekend sales alone, availability of just 2-3 million units for the launch is unlikely to satisfy customer demand for iPhone X. As such, be prepared for the Apple Store to quickly go out of stock when the devices go up for sale.

Some good news is that KGI believes production of the circuit boards and dot projector will be able to increase drastically across November which should allow Apple to increase iPhone X output quickly after the release.

That being said, KGI has dropped estimates for initial fourth quarter shipments from 30-35 million to 25-30 million units. In the first quarter of 2018, though, KGI believes shipments could increase by as much as 50%.


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