Apple's (NASDAQ:AAPL) iPhone X is suffering from production delays. This we know. Unfortunately for Apple, consumers, and investors, it appears that the delays have only gotten worse.
Raymond James analyst Christopher Caso issued a recent research note (via Tech Trader Daily) following a trip to Asia to conduct supply checks, and the note suggests there has been "an incremental delay in the build plans" recently, which will push volume production further into the December quarter (fiscal Q1). Orders have only solidified "as recently as last week," according to Caso.
Remember, Apple hadn't even given supplier Finisar approval for volume production as of the first week of September, so while Caso's note does not mention Finisar specifically, it's possible that the optical component maker secured the approval shortly after announcing manufacturing delays related to VCSEL sensors.
In Caso's view, volume production is expected to start in mid-October, which is roughly a month later than the supply chain was anticipating as of a month ago. At the end of June, suppliers were expecting volume production to start in August.
Better late than never?
Ideally, you want to commence volume production before you unveil the product, not after. Under normal circumstances with no severe component bottlenecks, Apple typically begins volume production two to three months ahead of its product unveiling, allowing it to build millions of units to begin shipping shortly thereafter. The Mac maker stopped bragging about launch weekend sales last year, but it shipped 13 million new iPhones for the 2015 launch weekend. Apple also needs to build inventory for its retail stores as well as third-party distribution channels.
For a September unveiling, that would mean preferably starting volume production in June or July, if possible. Even starting volume production in August would be relatively behind schedule, yet now we're talking about volume production getting pushed back to October.
One difference this year is that Apple is releasing three phones simultaneously (iPhone 8, iPhone 8 Plus, and iPhone X), so demand will be partially split among the different models, albeit still heavily concentrated on iPhone X. iPhone 8 and 8 Plus don't appear to be suffering from any supply or production issues, as they are incremental updates to predecessors that have been in steady production for a while now.
When Apple explained last year why it would stop disclosing launch weekend sales, it said that initial sales were "governed by supply, not demand," in which case the metric was not useful for investors in determining demand. This year, that sentiment will be particularly true -- perhaps more than ever before.