Reuters
It's the latest sign that Apple's $999 iPhone X may be difficult to find shortly after it launches in 57 countries on November 3, including China and the United States. Preorders for the device begin October 27th.
"While we revise down 2017F iPhone X shipments on TrueDepth Camera production & assembly difficulties, it represents a great challenge for Android camp to replicate," KGI Securities analyst Ming-Chi Kuo wrote in an "Apple Insight" note seen by Business Insider. Kuo now believes Apple will ship 30-35 million iPhone X units in 2017, down from his previous estimate of 40 million.
The iPhone X has a complicated 3D camera mounted on its front it calls TrueDepth. The camera is used to unlock the phone using facial recognition technology. But several reports have revealed that there have been significant production issues with the new camera, leading to a bottleneck in iPhone X production.
Apple
Kuo writes that "issues with the production of TrueDepth Camera can potentially be overcome in a few months."
The upside to TrueDepth manufacturing woes for Apple is that Kuo believes that Android manufacturers won't be able to match its features or functionality for a while - between 18 and 30 months, he writes, leaving Apple with a strong exclusive feature on high-end smartphones and clearing the way for growth in 2018 and 2019.
There seems to be high demand for the iPhone X - a previous estimate from KGI Securities suggested demand of as many as 50 million units on launch day.
This could cut into iPhone 8 sales. Apple announced the iPhone 8 at the same time as the iPhone X but it's less expensive and more like previous iPhone models, which means that some customers may be holding out for the pricier, more-advanced device.
But Kuo doesn't think that iPhone 8 sales will suffer that much. "In light of better-than-expected shipments of iPhone 8 Plus, we see limited downside to our combined shipments estimate for iPhone 8 and 8 Plus," Kuo wrote.
"Moreover, we are of the view that even if iPhone 8 shipments forecasts are revised down, the consumer appeal and robust shipments momentum of iPhone X will be unaffected."
Kuo concludes that supply chain companies with "prominent exposure to iPhone X features" are a good investment. Taiwanese companies that count Apple as a customer that Kuo likes include Hon Hai, Largan, TSMC, Chunghwa Precision, Tong Hsing, and GIS.