“Apple Inc.’s iPhone 5 supply shortfall is being exacerbated by a quality-control crackdown at Foxconn Technology Group that’s designed to cut the number of devices shipped with nicks and scratches, according to a person familiar with the matter,” Tim Culpan, Alexandra Ho, and Adam Satariano report for Bloomberg.
“The scrapes, which sparked complaints with the iPhone’s debut last month, are due to Apple’s decision to use a type of aluminum that helps make the smartphone thinner and lighter,” Culpan, Ho, and Satariano report. “Senior Apple managers told executives at Foxconn near the end of September to tighten production standards, said the person, who asked not to be named because the matter was private.”
Culpan, Ho, and Satariano report, “Stricter benchmarks have hampered production of the iPhone 5’s anodized aluminum housings, forcing Foxconn’s Hon Hai Precision Industry Co. (2317) to idle factories, the person said. The slowdown is heightening supply concerns that have cost Apple about $60 billion in market value since the iPhone debut — a shortcoming of the drive to imbue products with qualities that make them alluring yet more difficult to manufacture. ‘The iPhone 5 is not easy to put together because it’s a minimalist design,” said Shaw Wu, an analyst at Sterne, Agee & Leach Inc. “Apple has a very high standard, where it aims to produce each model to be an exact replica where variance is measured in microns.'”
“While Apple sold a record 5 million iPhone 5s the first weekend the device was on sale, the tally would have been higher if not for supply constraints, the company said. Apple shares have declined 9.4 percent since a record close on Sept. 19, two days before the new iPhone went on sale. Apple fell less than 1 percent to $635.85 at the close in New York,” Culpan, Ho, and Satariano report. “‘It’s a trade-off because aluminum is strong and tougher to break, and it’s light and more economical, yet it is also easier to scratch,’ said Jacob Huang, a professor of materials engineering at National Sun Yat-Sen University in Kaohsiung, Taiwan. ‘You could use magnesium, which is lighter, but even softer and easier to scratch, or glass which is heavier but harder yet more brittle.'”
MacDailyNews Take: Or you could use Liquidmetal, if you could ever figure out how to do so at an acceptable cost.
Culpan, Ho, and Satariano report, “While the stricter requirements and assembly disruptions affect output, Foxconn and Apple are well-experienced in dealing with such challenges, said Jeff Pu, a Taipei-based analyst at Fubon Financial Holding Co. ‘These stricter standards would lower the yield on good products being shipped out,’ Pu said. ‘They’ll handle it by increasing labor and machinery, and Apple may even use its cash to buy new equipment to assist Foxconn.'”
Read more in the full article here.
Related articles:
Foxconn Labor disputes said to disrupt iPhone production for 2nd time – October 9, 2012
Foxconn denies plant strike report; Apple shares down with many U.S. stocks – October 8, 2012
Foxconn: No strike at China iPhone plant; production remains on schedule – October 6, 2012
Dunno? Is aluminum a good choice or not? I would hope that Apple had done enough research into making a good decision here. Is this a problem or not? It sounds as though it could be. Sure aluminum scratches but that doesn’t mean it’s a good choice for the back of a cell phone. I have the 4S but to be honest, it’s been in a nice protective rubbery case since day one. So it could scratch and I would never know it. Is this just a much ado about nothing? Inquiring minds want to know. But as an investor and a long,long,long time Apple user I’ll be pissed if this turns out to be an unavoidable mistake. But I’ll bet they don’t use aluminum again no matter what.
Avoidable
I don’t know what Al alloy Apple is using, but it appears that they went for ductility over hardness. Options for toughening up future iterations of iPhone cases include heat treatment and anodizing the surface rather than painting it.
As with many Apple-related issues lately, this one is overblown, IMO. It is a delivery cosmetic issue that quickly becomes irrelevant if the device is used without a case. Al is soft and will get scratched by keys, etc.
The MDN contention to use liquid metal is idiotic. Liquid Metal represents a new set of manufacturing techniques. If Apple could have used those techniques here, they would have already. No one knows (outside of Apple) where this new set of technologies is headed.
Is it time for Apple to begin reacting to so much negative press? Does Apple even have a PR department?
Yes; we are it.
I’m beginning to think so.
I don’t see how this is negative press.
“Apple Inc.’s iPhone 5 supply shortfall is being exacerbated by a quality-control crackdown at Foxconn Technology Group that’s designed to cut the number of devices shipped with nicks and scratches, according to a person familiar with the matter,…”
“supply shortfall, exacerbated, quality-control crackdown, designed to cut devices shipped, nicks and scratches, person familiar with the matter. Do you understand now? This is in one paragraph.
When I got my and my wife’s 64GB iPhone 5s at the AT&T store on day 1, I almost got 2 white ones because of the black anodize. I still went with the white for her and black for me. I also got two otterbox cases, like I have since our iPhone 3Gs, 4s, and 4Ses.
After they were done activating it, I was looking over my black 5, and noticed a small dimple in the aluminum on the back. I am aware that it may get some signs if wear over time, but I intend it to be from my use, and not out of the box. I handed it back and told him I wanted a different one.
I was very surprised to see flaws, even very slight ones, out of the box.
I would have my iPhone enclosed in a nice protective case and I’d never worry about some tiny scratches because I wouldn’t see them with the iPhone in a case. I’d say this matter is being entirely overblown because the iPhone isn’t actually a piece of jewelry or art object. I guess it depends what the customer thinks they’re paying for. I guess if they expect the product to be cosmetically flawless inside and out, then maybe they should complain. I only know for a fact that within one day of normal use, the iPhone will be marred and scratched anyway unless it’s put in a case. All my iPods are in silicone or leather cases for shock protection and not because I’m worried about them merely getting nicked. I’d rather Apple use aluminum than plastic and that’s all there is to it.
Is there a reason why MDN is so anti-apple lately? everything is a negative story, down on Tim Cook, down on everything they do.
Looking at trends, they are doing great things and are just as far ahead of others as they always were. ye of little faith.
If I go to another apple blog site I see a mix of positive and negative stories, as this site used to be. Now it’s all about how apple is spiraling to mediocrity. not sure how much longer ill want to keep reading this slanted site.
“Apple has a very high standard, where it aims to produce each model to be an exact replica where variance is measured in microns.’
QUALITYGATE!