Sourcetoday 1652 Iphone 8 Revised
Sourcetoday 1652 Iphone 8 Revised
Sourcetoday 1652 Iphone 8 Revised
Sourcetoday 1652 Iphone 8 Revised
Sourcetoday 1652 Iphone 8 Revised

How Apple’s New Phones May Impact the Component Supply Chain

Nov. 7, 2017
The new iPhone launches are creating bottlenecks in the NAND memory and OLED panel supply chains.

As with any major consumer electronics release, it didn’t take long for the new iPhone to start sparking concerns about supply chain disruptions and component shortages. In fact, as early as June, Reuters was already reporting on the possibility of a memory chip shortage related to Apple’s new iPhone 8 and X launches.

“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,” one source pointed out in As iPhone 8 looms, firms scramble to lock up memory chip supply.

Noting that about 18% of the global annual supply of NAND chips is bought by Apple, Reuters’ Se Young Lee notes that in recent years, electronics makers have typically build up inventory during the first half of the year “to avoid being squeezed by Apple.”

“For the iPhone 8 launch, there have been specific references to this by customers and distributors as a reason for longer delivery times and shortages,” Fusion Worldwide’s Tobey Gonnerman told Reuters. “Buying buffer stock and holding product in hubs to protect against anticipated delivery interruptions has certainly become more common in recent months.”

It’s a Hit…Now What?
As predicted, Apple’s iPhone X has been a hit among mobile phone users. On launch day, for example, the supply of the phones was exhausted “in mere minutes after the handset went up for sale,” according to SupplyChain247. “Apple's supply chain is rumored to only get about 20 million units delivered before the end of 2017.”

“Whatever the final tally, it is clear initial demand for iPhone X is far outstripping Apple's stockpile,” the publication reports, noting that the company and its suppliers are working to “solve production issues,” and that some analysts are predicting a “rapid increase in availability” starting in early-2018.

Apple Insider’s Mikey Campbell has a slightly more positive spin on the situation. “Apple's iPhone X production woes are nearing an end, according to well-informed analyst Ming-Chi Kuo, who says shortages of key components like specialized handset circuit boards should be resolved in November,” Campbell writes in Apple to stockpile 2-3M iPhone X units prior to launch, component shortage eases in November.

The main bottlenecks in the production process right now are flexible printed circuit boards and the supply of antenna FPCBs, both of which are “impacting Apple's ability to build in mass quantities,” Campbell writes.

The Bad and the Good of It
As Apple works to right the ship and get its phones manufactured and into the hands of its customers, electronics buyers may be wondering just how some of the related supply chain bottlenecks will impact them. Circling back to the fact that Apple nearly always runs into some sort of supply challenges when launching a new phone, 9to5Mac’s Michael Potuck points to NAND memory and OLED panels as two areas of potential concern.

“Component shortages is the factor we’ve heard most about, and this year the iPhone X has been hit with shortages of both NAND memory and OLED panels. Nintendo has even called out Apple for causing its shortages of its Switch console,” Potuck writes in Here’s why new iPhones are always supply-constrained at launch.

On the OLED front, Apple is relying on Samsung to produce all of the iPhone X panels, Potuck adds, but is looking to diversify its production with help from LG and possibly others. “To sum it all up, manufacturing something like the iPhone is incredibly complex, and most likely, Apple just wants to get its new iPhone X into our hands as soon as possible,” an optimistic Potuck writes. “Although delays and shortages are disappointing in the short-term, it’s amazing to consider the awesome technology we have access to and how it’s evolving every year.”

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About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.