Tim Culpan On iPhone X Production Problems

23 October 2017

Bloomberg:

So when Cupertino decided to go with OLED, it must have known that supply would be tight and the company would be relying on nemesis Samsung. Perhaps Cook and Williams were OK with this and figured Samsung would ramp up fast enough to ensure OLEDs for all, or maybe they thought alternative suppliers would come on stream.

The biggest bottlenecks in the iPhone X supply chain are not directly related to the OLED screen at all. The OLED panel is expensive (five times more costly to Apple than an iPhone 8 Plus LCD) and only available from a single supplier, but that screen can be produced at the required ‘Apple scale’ by Samsung.

It is true that adopting an (almost) edge-to-edge OLED screen had implications on product specifications; namely the need for Face ID as a replacement to Touch ID. The depth-sensing camera system is one of the parts that caused holdups in ramping iPhone X units.

Regardless, Apple handled the situation the best it could. They needed to bring out a revolutionary high-end phone this year;┬áthe 6-series chassis with forehead and chin was showing its age. I’m sure they knew about the potential pitfalls in the supply chain that could arise, natural for any product like iPhone X that uses new internal components at incredible volumes, but they simply had to take that on the chin or risk falling behind in the marketplace.

Instead of the X, imagine that Apple released a much more conservative phone as their 2017 flagship iPhone. It may well have been readily stocked in stores, but who cares if nobody is excited to queue up (figuratively) and buy it. It would also have been incredibly punishing to Apple’s brand reputation; the press would publish negative stories about Apple’s lack of vision and innovation in droves.

It’s just an untenable proposition. They needed an impressive high-end device, at any cost, and the iPhone X is exactly that. Millions of people are about to buy it on Friday. Millions more will be gasping to buy it as soon as they can. The production issues and lack of supply is frustrating … however it’s only a short-term concern. KGI’s Ming-Chi Kuo believes iPhone X production will ramp up to full capacity sometime in November.

Facing the choice between launching a radical new design with a few months of supply shortages, or heralding a ‘boring’ iPhone for another year, Apple clearly made the right decision.