Apple Inc. (AAPL) iPhone 5S Fingerprint Sensor Causing Supply Problems

Apple Inc. (AAPL) iPhone 5S Fingerprint Sensor Causing Supply Problems
JESHOOTS / Pixabay

Supply of the iPhone 5S may be limited in the beginning thanks to problems Apple Inc. (NASDAQ:AAPL) appears to be having with the fingerprint scanner. DigiTimes said last month that the fingerprint sensor was causing problems and would likely affect early supply of the next iPhone. Now the Taiwanese newspaper is again saying it and providing more details.

Apple Inc. (AAPL) iPhone 5S Fingerprint Sensor Causing Supply Problems

Only 3 million iPhone 5S handsets could be available

In last month’s report, DigiTimes said production of about 3 million handsets would be pushed to the December quarter. However, it sounds like the problem may be worse than the newspaper reported a month ago.

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According to the site’s latest report, Apple Inc. (NASDAQ:AAPL) will only be able to ship 3 million to 4 million iPhone 5S handsets by the end of September. Originally, the company wanted to ship 10 million iPhone 5S handsets right out of the gate. The newspaper said that specifically, there are problems with the integration between the A7 chips and the fingerprint sensor.

DigiTimes also said low yield rates at the packaging company Xintec are causing supply constraints. It indicated that an engineering team has been sent to Xintec to help ramp up the yield rate and that Apple Inc. (NASDAQ:AAPL)’s iPhone 5S supply chain will be able to begin volume production of fingerprint chips at the end of this month.

What effect will this have on Apple’s sales?

Business Insider’s Jay Yarow notes that last year with the launch of the iPhone 5, Apple Inc. (NASDAQ:AAPL) sold about 5 million handsets, which means sales of this year’s model may be constrained significantly if the same number of people want to buy it upon launch. Apple Inc. (NASDAQ:AAPL) just released its third quarter guidance, including the number of iPhones it planned to ship.

Guidance was higher than expected, but the company likely knew then how many handsets it would be able to ship right at launch. We’re expecting the next iPhone to be unveiled Sept. 10, so launch is right around the quarter. Apple’s third quarter revenue guidance implied 2.8 percent growth if looking at the high end, which would mean that Apple is expecting its new iPhone to sell slightly better than last year’s model.

Yarow also notes that Apple Inc. (NASDAQ:AAPL) is known for using more than one supplier, so even if one supplier told DigiTimes that it’s having problems with the fingerprint sensor, it doesn’t mean all of them are. As such, it’s possible that supply won’t be affected much at all.

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