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Quality-control crackdown causing iPhone 5 supply issues, Apple shares knocked

iPhone 5 Front and RearWhen the new iPhone 5 started landing in people’s hands last month, it didn’t take long before forums started to fill with comments from disgruntled customers complaining that their handset was delivered with scuffs and scratches on its anodized aluminum back.

Its predecessor, the 4S, had a glass back so didn’t suffer from the same problem. The new aluminum design has enabled Apple to make its popular smartphone thinner and lighter than any earlier iteration, but it seems the soft material also makes it more susceptible to damage.

Quality control

It appears the issue has caused something of a stir behind the scenes at Apple, with a Bloomberg report Wednesday suggesting the supply shortage of the new handset is in part down to a quality-control crackdown by the phone’s manufacturer, Foxconn.

Foxconn is reportedly working hard to limit the number of Apple smartphones leaving its plants with scuffs and scratches, with Bloomberg citing “a person familiar with the matter” as its source.

“Senior Apple managers told executives at Foxconn near the end of September to tighten production standards,” the report claims.

A shortage of iPhone 5 components is also proving to be a problem for the Cupertino company, contributing to manufacturing challenges. As a result, RBC Capital Markets analysts have reevaluated their iPhone 5 sales forecast for the December quarter, cutting it to 49 million units from 57 million.

Share price drop

Worries about supply appear to have been a contributory factor in Apple’s falling share price, with $60 billion wiped off the company’s market value since the handset’s launch. On Tuesday shares closed at $635.85, significantly down from the record $700+ value they reached only a couple of weeks ago.

Demand for the iPhone 5 has admittedly been incredibly strong, with Apple announcing a record five million orders in its first three days of sales. Although a wait is always expected if you order an iPhone online soon after launch (currently 3-4 weeks), it seems the supply problems are being compounded by the quality-control issue and component shortages.


Handsets turning up with scuffs and marks were reported right from the start with the iPhone 5. One unhappy owner fired off an email to Apple’s marketing chief, Phil Schiller, and received the following response:

“Any aluminum product may scratch or chip with use, exposing its natural silver color. That is normal,” Schiller wrote. Trouble is, some of the devices have been arriving damaged.

Until the initial rush to buy the new handset dies down and Apple gets on top of the current supply issues, a certain degree of patience is required if you’re thinking about ordering an iPhone 5 anytime soon. As for Apple’s share value, no doubt that’ll bounce back once (if) it unveils the iPad Mini later this month.