Apple Inc. Reportedly Struggling With New Touch ID Tech

By Ashraf Eassa Markets Fool.com

Later this year, Apple (NASDAQ: AAPL) is expected to launch three iPhone models. The first two -- widely referred to as the iPhone 7s and iPhone 7s Plus -- are expected to be straightforward successors to the current iPhone 7 and iPhone 7, sporting improved performance and additional features in a design that's largely the same as their predecessors.

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The third model, though, is purportedly a premium model with all the technical bells and whistles thrown in. Among the rumored features are 3D sensing, a gently curved full-face display, and a fingerprint sensor built directly into the display.

Image source: Apple.

According to a report from Cowen and Company analyst Timothy Arcuri (via MacRumors), Apple is facing serious difficulties in integrating the fingerprint sensor into the display.

Low yield rate

The report, MacRumors says, claims that manufacturing yields of Apple's under-the-glass fingerprint sensor is "low" and that the company "seems unwilling to use an outside solution at this time."

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What a low yield rate means is that of all the sensors produced (or perhaps, devices with sensors integrated) in each batch, a small percentage of them function properly. This can lead to increased product manufacturing costs (since so many potential sensors need to be tossed out) as well as supply problems (as manufacturing capacity is not infinite).

If Apple can't work those yield issues out in time, Apple will have three options, per Arcuri: ditch the Touch ID functionality altogether, move the Touch ID sensor to the back of the phone, or delay production of the premium iPhone until yield rates are satisfactory.

What should Apple do?

Arcuri reportedly said that removing Touch ID is "unlikely" due to security concerns and that such a removal would, in MacRumors' words, "potentially create issues with Apple Pay."I completely agree. Arcurialso reportedly says that moving the Touch ID sensor to the back of the phone would (again, using MacRumors' words), "not be a user-friendly or optimal solution to say the least."Again, I totally agree.

The final option that Arcuri brings up is simply delaying the production of the phone.Although a production delay would be a bummer, especially given that this new phone sounds really exciting and customers are probably going to want to get it as soon as possible, this is likely to be the best option.

Remember, Apple's job needs to be to build the most interesting, compelling products as possible to get people with older iPhone models to upgrade and to entice users of Android phones to convert over to iPhone rather than choose from the (arguably) quite feature-rich Android competitors in the market.

If Apple has to delay commercial availability of a much nicer, more feature-rich device for a month or even two, then that's what it ought to do. Apple will still be able to take pre-orders for the devices, and it'll still have the new iPhone 7s/7s Plus to sell to the masses while it ramps up supply of the premium OLED iPhone 8 model.

De-featuring the premium OLED iPhone to try to hit September availability is the wrong way to go, and as a potential Apple customer who is very excited for this new device (and I'm sure there are a lot of people out there who are just as excited about this device, if not more so, out there), I'd rather Apple take a little bit more time and release something incredible.

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Ashraf Eassa has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.