The better-than-expected iPhone X shipping estimates ahead of the holiday season are due to an improvement in the phone’s production instead of low demand.
KGI Securities analyst Ming-Chi Kuo says that the iPhone X production issues “have been well addressed” in the last few weeks. While a month ago, Foxconn was only able to produce around 50,000-150,000 iPhone X units a month, it is now able to produce 450,000-550,000 units per month.
It is due to these improved production yields that Apple was able to ship many of the iPhone X pre-orders ahead of time despite their estimated delivery date being shown in early December. When the iPhone X launched, it had a shipping estimate of around 4-5 weeks but Apple has been able to bring it down to 1-2 weeks now.
The two main bottlenecks related to the iPhone X production were the poor yields for the dot projector and shortage in LTE antenna components. LG Innotek and Sharp have seen a sharp improvement in their yield rates for the dot projector, while Career was able to step up and provide Apple with the required LTE antennas after Murata failed to do so.
(1) Hon Hai’s daily shipments of iPhone X have climbed to 450-550k units, up from 50-150k units 1-2 months ago; (2) shipments of Career’s LCP LTE antenna will likely grow 100% MoM in both November and December; and (3) production yield of Dot projection module, made by LG Innotek (KR) and Sharp (JP), has moved quickly above 80-90% or higher from below 60% 1-2 months ago.
The improved production yield means Apple could end up shipping 10-20 percent more units of the iPhone X than initially predicted by Kuo. While this bodes well for Apple for Q4 2017, it also means that iPhone X shipments in Q1 2018 will be flat or slightly lower than the previous quarter.