Apple Shares Drop As Report Says iPhone 8 Had Glitches, Delays

Apple saw its shares drop Thursday afternoon following a report by the Wall Street Journal that said the upcoming iPhone 8 was “plagued by production glitches” that could lead to “extended supply shortfalls and shipping delays.”

The iPhone 8, which is expected to be revealed next week at Apple’s event, faced issues early in the manufacturing process this summer which pushed the company’s timetable back by about a month, the report said.

Why The iPhone 8 Production Was Delayed

Production of the iPhone 8’s was due to Apple’s decision to use OLED screen displays, the report said. The OLED modules are being produced in Vietnam by a Samsung Electronics affiliate, but unlike Samsung smartphones, Apple has had trouble with the screen. For Samsung’s OLED devices the display and touch panel are integrated, but the iPhone 8’s display module has the touch panel outside of the display. That leads to more steps and extra layers of adhesive and protective film than Samsung’s process. Apple’s version also creates a greater risk of manufacturing error, the report said.

Rumors have suggested the iPhone 8 will ditch the physical home button, but it seems like Apple dropped that idea. According to the Journal, Apple tried to integrate the Touch ID into the display, but it was too difficult. As deadlines got closer, the Cupertino giant ditched its plans. On the iPhone 8, users will unlock the device using a password or a new facial-recognition feature, the report said. The face recognition technology on the iPhone 8 had been previously rumored. Apple is expected to release the HomePod later this year, and the speaker’s firmware points to an infra-red front camera with 3D face unlocking capability on the iPhone 8, which could replace the physical fingerprint button.

To make up for the lost time, iPhone assembler Foxconn Technology Group has been ramping up production at its facility in Zhengzhou, China. The company was even handed out bonuses to employees who can bring in new workers to the plant. By June, Foxconn’s plant was already employing about 250,000 workers, the company said.

Apple Shares Drop

The report said short quantities of the iPhone 8 could go past the initial sales period, which is expected to start September 22. The limited units could weaken analysts' and investors’ sales predictions for this year’s holiday season.

After the Journal’s report indicated problems with the 10th anniversary iPhone, the Cupertino company saw its shares drop from the day's high of $162.24 a share down to $161. Foxconn Technology also saw its shares drop Thursday.

The iPhone 8, which could also be called the iPhone X, iPhone Pro or iPhone Edition, has been closely followed by analysts. Experts believed the new iPhones could boost Apple sales, especially with the iPhone 8’s predicted $1,000 price. Back in January, Nomura Instinet analysts predicted a “supercycle” in the last three months of this year that will drive sales of the new device higher than the iPhone 6. The predictions rocketed Apple’s share price to record highs this year.

Meanwhile, Deutsche Bank analysts said last month the previous forecasts were too optimistic and said investors will be “disappointed by iPhone growth in FY-18 and FY-19.” The analysts added that the higher price of the iPhone could affect sales.

"Generally, when prices go up, demand goes down," the analysts said this summer. "A scenario where prices go up and demand goes up seems highly unlikely in our view."

Release Date Rumors

Apple is expected to reveal the iPhone 8 and two other LCD iPhone 7s models on September 12 at 1 a.m. EDT in the Steve Jobs Theater at the new Apple Park campus. A recent report pointed to a delayed launch date, claiming preorders for the iPhone 8 will start Sept. 15 but won’t ship until October.

Meanwhile, KGI Securities analyst Ming-Chi Kuo, who has a strong track record, said last month the iPhone 8 will be launched on time alongside the iPhone 7S models, but will release in extremely limited quantities.

As for the iPhone 7s devices, those models will reportedly ship on Sept. 22 to those who pre-ordered the device and to retail stores.