iPhone 5 demand putting pressure on Foxconn

Posted on 8 Nov 2012 at 10:02, by Gareth Halfacree

Foxconn chair Terry Gou, head of the company responsible for making Apple's mobile products, has admitted that the device is proving difficult to manufacture - leading to fears that the device will become harder to find as stocks dwindle.

Apple's latest smartphone device has a larger high-resolution 'retina' display than its predecessors. Coupled with a more powerful processor and changes to the casing, the device is far more tempting to consumers - but also more challenging for manufacturers.

"Market demand is very strong, but we just can't really fulfill Apple's requests," Gou explained at a press conference in Taipei attended by the Wall Street Journal. In other words: Apple is selling the iPhone 5 faster than Foxconn can make them.

It's bad news for both companies: if Foxconn can't meet Apple's demand, the company is likely to look elsewhere for additional manufacturing capacity, cutting into Foxconn's profits and boosting those of its rivals, and Apple risks the ire of its potential customers if it can't supply their handsets. Worse still, the manufacturing problems are hitting as Google is launching its Nexus 4 smartphone, a high-performance, cut-price device manufactured by LG and seen by many as a real alternative to the iPhone family.

Some of the delays are being blamed on a stricter quality control programme following reports that users had received iPhone 5 handsets with scratches and dents in the soft aluminium casing. Apple has stated that the material is likely to scratch during use, and has declared that to be normal and expected, but it was clearly unhappy with the units being scratched out of the box. Unfortunately more rigorous quality controls mean a slower manufacturing process on an already complex device.

Apple has yet to comment on Gou's statement or on the supply constraints surrounding the iPhone 5.

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