Apple may have set too high of expectations with their latest iPhone 5. AI reports that they have suffered difficulties in making the iPhone 5 and it is thought that this will affect their gross margins in the near term, as they will have to absorb some costs that are associated with quality control.
iPhone 5 design causing manufacturing problems
Shaw Wu said that Apple should expect vintage conservative guidance before the big holiday quarter as they will have to stand to costs associated with quality control. The near term margins for gross may be around 40.5 to 41.5 percent, this happens to be lower than the consensus from Wall Street of 42 to 43 percent.
This prediction came about following what an unnamed official at Foxconn said about the new iPhone 5 being the most complicated handset to have been assembled. The design of the iPhone 5 is complex and this has meant low yields of it, which in turn meant supplies being constrained on the market.
Wu also said that the margins of Apple will be lower thanks to the launch of the iPad Mini at 7.85 inches. Apple may sell the smaller tablet at lower margins than they do with their larger iPad, at least when they first launch it. This would allow them to compete with the Google Nexus 7 and Amazon Kindle Fire.
The iPhone 5 of course has been dubbed the thinnest smartphone in the world. This as well as its choice of the softer aluminum body has caused issues with both quality control and assembling of the device.