Apple (AAPL) 's ramp-up of its highly-anticipated iPhone 8 is reportedly facing supply and other issues that are causing analysts to reduce their shipment expectations for the year.
Noted Apple analyst Ming-Chi Kuo of KGI Securities recently predicted the production ramp-up of the 10th anniversary edition of the iPhone could be delayed to October or November, rather than the usual August to September period. As a result, Apple may ship just 80 million to 90 million iPhones in the second half of 2017, vs. 100 million to 110 million iPhones shipped in the year-ago period, Kuo wrote in a recent note.
On Wednesday, Bank of America analysts lowered their iPhone shipment estimates for the year by 11 million due to supply chain concerns having to do with fingerprint and 3D sensors for the new model.
Apple is expected to release a fully redesigned iPhone 8, as well as updated versions of the iPhone 7 and iPhone 7S this fall. The new iPhone could cost over $1,000 and might be called the iPhone 8, iPhone X, iPhone Pro, or simply iPhone.
Here's a list of supply and other reported issues that could delay the availability and functionality of the three new smartphones.
Toshiba is struggling to get Apple the chips it needs amidst a global NAND shortage.
1. The NAND flash supply for the new iPhone is falling short.
The global supply of NAND and DRAM chips has been under pressure in the past year and Apple isn't immune to the shortage.
"The problem will be more acute for the NAND market, where the iPhone remains a critical source of demand given the huge sales volumes and recent moves to increase storage capacity on the device," a source told Reuters in June.
SK Hynix (HXSCL) and Toshiba (TOSYY) are both churning out a lower-than-expected number of 3D NAND chips, resulting in a supply concern for the newest iPhone, Oppenheimer wrote in a note on July 7. "The overall supply of NAND flash chips for the upcoming iPhones has fallen short of demand for the devices by as much as 30%," Oppenheimer's Rick Schafer wrote.
Apple's Plan B is to use rival Samsung's (SSNLF) NAND chips because the South Korean-based tech company has a steadier supply of the chips, the firm said.
The newest iPhone is expected to have a similar looking screen to the Samsung Galaxy S8 (above).
2. The iPhone's expected edge-to-edge OLED screen is causing supply issues.
Apple is also relying on rival Samsung (SSNLF) for its expected edge-to-edge organic light-emitting diode (OLED) screens, similar to the ones seen on the Samsung Galaxy S8 smartphone that came out in April. Apple reportedly ordered 70 million OLED screens from Samsung this year.
OLED screens could become the new standard for smartphones because they provide sharper color contrast than traditional LED screens and they're thinner and more flexible.
However, Apple may have trouble making OLED screens the new industry standard considering panel-makers told Nikkei last week that they are concerned about the supply of the screens. Sources voiced similar concerns to Fast Company in an article published Tuesday.
Apple engineers may be struggling to fix software issues on the iPhone 8.
3. Software issues are reportedly concerning even Apple's engineers ahead of the launch date.
Apple engineers are panicking about software issues on the upcoming iPhone 8, according to Fast Company, citing a source familiar with the situation.
The problem could cause production and shipment delays, or in the worst case scenario, Apple could even decide to ship phones with certain features disabled and then enable them later when they're ready. For example, the engineers are struggling with the wireless charging component of the iPhone so customers may be unable to use that feature until after the phones are already released.
Apple has a history of enabling features after shipping the iPhone when certain problems need more time to fix. For example, the iPhone 7 Plus didn't have a "Portrait Mode" when it first shipped, despite having the sensors and chips that enable the picture-taking mode that blurs the background of photos. That feature was only enabled after it was perfected. But wireless charging would be a much bigger feature to not have ready at release.
Apple's shares were up 1.4% to $147.80 by Thursday's close.
Visit here for the latest business headlines.