Fire At STMicro 3D Sensor Fab Could Impact iPhone 8 Builds

Apple Inc. AAPL could face production delays on iPhone 8 as 3D image sensors from STMicroelectronics NV (ADR) STM may not be ready for a September iPhone launch due to a fire at its fab in Crolles, France.

Last week, DigiTimes reported that the iPhone 8 would not enter production until September because Apple’s internal fingerprint sensor was proving difficult to manufacture.

Several Weeks To Resume Production

Analysts John Donovan and Steve Mullane of BlueFin Research say their checks showed that this fab is the sole manufacturing facility for STM’s 3D sensors. This incident has currently shutdown the facility and the checks suggest it could take several weeks to requalify the fab and resume production.

“These 3D sensors have a long production cycle time and relatively low yield rates, which will make it difficult for STM to get back on their production schedule target with each day that the fab is incapacitated,” the analysts wrote in a note.

That said, the analysts noted they have yet to see any corresponding push out of iPhone 8/X builds with the rest of the supply chain.

“We believe it’s likely that AAPL and STM are assessing the impact to the schedule and working on a recovery plan,” the analysts added.

Different Angle

But, Street analysts are providing a different angle to the story.

An analyst from Brian Garnier said delay had nothing to do with STM’s technical problems, but rather a ramp issue with Apple due to the complexity of the new design. A Northern Trust analyst provided a similar angle, citing the ‘radical redesign’ of the iPhone 8.

Recently, a research note from Goldman Sachs’ Simona Jankowski expressed increased confidence Apple would include 3D sensing, among other major new features, in the iPhone 8.

Jankowski mentioned that industry datapoints indicate “the inclusion of 3D sensing functionality is increasingly likely, which could enable a robust augmented reality (AR) feature set that we believe will be a key differentiator for the 10-year anniversary iPhone.”

At last check, shares of Apple were up 0.22 percent to $138.99.