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iPhone X Production Challenges Identified as 3D Sensors
October 03, 2017
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Apple continues to experience production snags with its 3-D sensors for facial recognition on the iPhone X slated to be shipping in early November. Apple introduced facial recognition to unlock phones and for users to authenticate payments on their handsets for the first time with iPhone X. The components, known as Romeo and Juliet among Apple engineers and suppliers, work together to allow users of the latest iPhone to unlock their devices by scanning their faces, the people said. It has taken more time to assemble the Romeo modules than the Juliet modules, they said, creating an imbalance in supply. That has created a bottleneck for the iPhone X’s mass production, according to one person, which could crimp supplies beyond typical initial shortfalls when the phone is released Nov. 3.  The production problems are the latest glitch as Apple and its suppliers rush to load the flashy new features into the flagship model that carries high stakes for Apple. Face recognition is not available on the lower-priced iPhone 8 phones. Two executives working for iPhone suppliers said that 3-D sensor part makers are still struggling to reach a satisfactory level of output, and to boost their yield rate. 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 mass production of iPhone X would begin the second week of October and that handsets would begin to leave China for global distribution a week later.  The Foxconn Technology Group, at its factory in the central Chinese city of Zhengzhou, assembles the iPhone X. According to Pu's estimate, Foxconn churned out 2 million iPhone X units in September, and in October that number should rise to 10 million. He said that Foxconn will assemble a total of 40 million iPhone X handsets by year-end, lower than his original estimate of 45 million earlier this year.  With the iPhone X still more than one month away from reaching consumers, initial appetite for iPhone 8 and iPhone 8 plus appears to be weak.  Some recent reports suggest that the delayed shipment of the premium handset may have dampened demand as well.  Apple has reportedly instructed component suppliers to withhold part of the component shipments prepared for the production of iPhone X devices, according to Digitimes. Suppliers are currently shipping parts and components that amount to only about 40% of the quantities originally planned for the initial production of iPhone X. Analyst Ming-Chi Kuo of KGI Securities believes that preorder demand for Apple iPhone X could top 50M units. The 3D sensing (TrueDepth camera) on iPhone X is composed of a structured-light system, time-of-flight system and a front-facing camera, which represents a far more complex structure than those of rivals. It will therefore be harder to achieve mass production.
The Romeo module is assembled by LG Innotek and Sharp Corp. Both companies declined to comment. Manufacturing troubles are par for the course when new models of iPhones are being built, one of the people said. “But problems will be resolved eventually,” the person said. Besides the facial-recognition system, difficulties involving the OLED screen have also made the iPhone X road to production bumpy. Apple initially hoped to equip the iPhone X with the Touch ID function, which allows users to open the phone by scanning their fingerprint. But incorporating the scanner into the new OLED display proved problematic, and Apple eventually scrapped the scanner on the new phones. According to ‘Taiwan-based upstream component supplier sources’ Apple has instructed component suppliers to withhold part of the component shipments needed for the production of the iPhone X. These sources indicated that suppliers are shipping ~40% of the parts and components needed for the original initial iPhone X production goals.  According to the same sources, Apple is waiting to see how pre-orders for the new phone will come in, and how the iPhone 8 and 8+ ratios look before increasing the order flow.  Apple did something similar with the iPhone 7 last year, pushing out about 40% of planned orders for 1 to 2 months as the pre-order book developed.