Quality problems sour new Apple iPhone
Added to previous supply shortfalls, a problem with Foxconn's anodised casings loses the smartphone giant up to US$60b in market value
Apple's iPhone 5 supply shortfall is being exacerbated by a quality-control crackdown at the mainland's Foxconn Technology aimed at cutting the number of devices shipped with nicks and scratches, according to industry sources.
The scrapes, which sparked complaints on the iPhone's debut last month, are due to Apple's decision to use a type of aluminium that helps make the phone thinner and lighter. Late last month, senior Apple managers instructed executives at Foxconn to tighten production standards.
Stricter benchmarks had hampered production of the iPhone 5's anodised aluminium housings, forcing Foxconn's Hon Hai Precision Industry - one of the makers of the device - to close factories, the source said.
The slowdown is heightening supply concerns that have cost Apple about US$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 is a minimalist design," said Shaw Wu, an analyst at Sterne, Agee & Leach. "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 five million iPhone 5s on 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 per cent since a record close on September 19, two days before the new iPhone went on sale.