Production of iPhone X Stumbles -- WSJ

By Yoko Kubota Features Dow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 28, 2017).

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BEIJING -- Apple Inc. hit a production snag with components crucial to its new iPhone X's facial-recognition system, people familiar with the situation said, adding to concerns about extended shortages when sales begin early in November.

The components, known as Romeo and Juliet among Apple engineers and suppliers, work together to allow users of the latest iPhone to unlock their devices by scanning their faces, the people said. It has taken more time to assemble the Romeo modules than the Juliet modules, they said, creating an imbalance in supply. That has created a bottleneck for the iPhone X's mass production, according to one person, which could crimp supplies beyond typical initial shortfalls when the phone is released Nov. 3.

Apple, based in Cupertino, Calif., declined to comment.

The production problems are the latest glitch as Apple and its suppliers rush to load the flashy new features into the flagship model that carries high stakes for Apple.

New iPhone 8 and iPhone 8 Plus models went on sale last week, but the new high-end iPhone X won't be available until Nov. 3 following production troubles this summer involving its screens, which are using organic light-emitting diode, or OLED, technology, as The Wall Street Journal recently detailed.

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There was also a hiccup during Apple's launch event Sept. 12, when the iPhone X failed to fully unlock the first time the company's top software executive used it before the audience. Apple later said the Face ID technology had been inadvertently disabled beforehand.

The handset, which commemorates the 10th anniversary of the iPhone, is Apple's most advanced yet and has several features that weren't on previous phones, adding to the level of difficulty in manufacturing them.

Apple's plan to launch the iPhone in more than 55 countries and territories Nov. 3 suggests it is confident it can meet demand, Sanford C. Bernstein & Co analyst Toni Sacconaghi said in a recent note.

But "if iPhone X availability issues persist beyond November 15 and into the holiday season, we could see some frustrated iPhone users consider switching to other offerings," possibly weakening sales estimates, Mr. Sacconaghi said.

The Romeo and Juliet modules at the center of the latest delay are two critical parts of Apple's facial-recognition system, which is based on 3-D sensor technology. The Romeo module features a dot projector that uses a laser to beam 30,000 infrared dots across the user's face, essentially mapping its unique characteristics. The Juliet module includes the infrared camera that reads that pattern.

One person said the trouble with "Romeo" involved complications in assembling the various components into the module. Both people said that meant there weren't enough "Romeos" to go with the number of "Juliets" on hand, although one of them said the Romeo assembly process is now moving smoothly.

The Romeo module is assembled by LG Innotek and Sharp Corp., one of the people said. Both companies declined to comment.

Manufacturing troubles are par for the course when new models of iPhones are being built, one of the people said. "But problems will be resolved eventually," the person said.

Besides the facial-recognition system, difficulties involving the OLED screen have also made the iPhone X road to production bumpy.

Apple initially hoped to equip the iPhone X with the Touch ID function, which allows users to open the phone by scanning their fingerprint. But incorporating the scanner into the new OLED display proved problematic, and Apple eventually scrapped the scanner on the new phones. The episode contributed to iPhone X sales being pushed back til November, people familiar with the matter said.

With all the new technologies, the iPhone X will cost from $999 to $1,149, compared with the starting price of $699 for the iPhone 8 and $799 for the iPhone 8 Plus.

Tripp Mickle in San Francisco and Yang Jie in Beijing contributed to this article.

Write to Yoko Kubota at yoko.kubota@wsj.com

(END) Dow Jones Newswires

September 28, 2017 02:47 ET (06:47 GMT)