This minefield of intelligence coming out of Foxconn and filtered through leakers and bank analysts surrounding the iPhone 8 does not seem to have ends to it. Speculators from former insider John Gruber don’t help the cause, either. But it’s an orgy of chatter and Apple’s continued success may be a beneficiary or a casualty to it.
KeyBanc’s Andy Hargreaves, John Vinh and Josh Beck co-wrote a note obtained by Barron’s that suggests that a fingerprint sensor may still have a chance at making it onto the iPhone 8, but it has a limited window of opportunity. And with design and production issues challenging the design of what was intended to be an under-display fingerprint sensor, that window might as well be only open just a crack.
It seems that delays are the word of the day before Apple absolutely decides to pull past the point of no return: omitting Touch ID on the iPhone 8.
We believe it would typically take 12 weeks from placement of fingerprint IC orders to full volume production of iPhones. Consequently, if Apple is able to solve its fingerprint problems and place orders for fingerprint ICs before August, it would likely be able to reach volume production in late October or early November. We believe this remains Apple’s preferred path, and expect it would be acceptable to both consumers and investors. It is entirely unclear if Apple will be able to fix the problem in this time frame.
While this crisis may introduce itself as an opportunity for iPhone fans to get used to a 3D facial scanner, practical everyday use of it may not be the most appealing to those same fans. Current technology is said to require a direct line-of-sight profile in order to evaluate and authenticate a user and a slower transaction time may discourage Apple Pay use — if Apple can implement facial authentication into Apple Pay’s payment verification methods in the first place. So much for tap and go.
With all this hullabaloo, KeyBanc believes that any delay of the iPhone 8’s launch through mid-November won’t have much of an impact in seasonal sales. Not so for the quarters afterward, though.
“Beyond this, we would expect mix and total unit volume for [fiscal 2018, which begins in October] to be meaningfully affected,” the note reads.
Narrative in this industry does not necessarily build in a linear fashion — we don’t know how it builds at all. But from what it sounds like to us, Apple has been getting more desperate in implementing a familiar fingerprint sensor in the frame of transitioning its customer base onto different, but early-stage authentication methods. We may find ourselves in a strange land if a failure finally emerges.