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Report: Apple Inc. OLED iPhone Production Delayed

By Ashraf Eassa - Jul 17, 2017 at 7:30AM

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Apple's contract manufacturers are reportedly experiencing low yield rates for the upcoming iPhone models.

According to DigiTimes, citing a report from publication Economic Daily News, the production of Apple's (AAPL -0.23%) OLED iPhone has been pushed out to the November to December time frame. Moreover, that OLED iPhone is expected to ship "only in small volumes initially."

The Economic Daily News report, DigiTimes says, asserts that "yield rates at the two main ODMs, Foxconn Electronics and Pegatron, have not yet reached levels that warrant mass production."

Apple iPhones displaying the company's App Store.

Image source: Apple.

To be clear, while DigiTimes says that the OLED iPhone has been delayed, the LCD-based 4.7-inch iPhone and its 5.5-inch counterpart have also reportedly seen their production schedules pushed out.

"Volume production of the 4.7- and 5.5-inch models at Foxconn and Pegatron are now expected to enter full swing in August, 1-2 months later than the normal mass production schedules of new iPhone devices in previous years," DigiTimes says, again citing the Economic Daily News report.

The good news and the bad

Obviously, if this report is true, then the bad news here from the perspective of both customers and Apple investors is that the launch and subsequent shipments-for-revenue for the upcoming iPhone models will be delayed.

Such a pushout could throw off Apple's typical financial patterns, leading the company to "miss" financial estimates over the next several quarters (if sell-side analysts don't update their financial models to account for this rumored delay).

Moreover, the later Apple introduces products, the stiffer the competition those products could ultimately face in the marketplace.

That's the bad news.

The good news (or, if you're more of a pessimist, the silver lining) is that if Apple "misses" on revenue over the next couple of quarters due to this pushout, it should be able to "beat" current estimates for quarters further out -- again, if those estimates, like the nearer-term ones, haven't been adjusted to account for this delay.

Additionally, if Apple is seemingly having this much trouble bringing these products into mass production, then that could be an indication that the devices feature relatively aggressive hardware designs.

Such an aggressive design is clearly to be expected from the OLED iPhone, but the fact that the LCD-based models have reportedly been pushed out, too, due to low yield rates suggests that those devices might not be as boring as many expect them to be.

Foolish takeaway

Apple is clearly under pressure to bring innovative new products to market this year, and it seems to want to deliver compelling innovations across its product stack -- not just at the very top with the OLED-based model.

It seems, at least from this report of manufacturing difficulties, that Apple has designed some difficult-to-build phones, suggesting that they are full of interesting new features and technologies.

In the short term, production delays/issues could be a negative for Apple and its highly important iPhone business.

Taking a longer-term view, if we consider that these smartphones need to remain on the market for a year, it's probably better that Apple took some risks to build great products than to have played it safe and built uninspiring products that arrive exactly on schedule.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.

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