Apple’s Supplier Can’t Keep Up With Demand For the iPhone 5

If you're expecting a bright and shiny iPhone 5 this Christmas, you might be in for a wait.

Foxconn, one of the key suppliers of Apple products, reported yesterday that they are having trouble keeping up with the staggering demand for the iPhone 5. As a result, it is shipping out "far fewer" iPhones that Apple is asking for, which could lead to a possible shortage of iPhones.

Supply-chain problems have led to a long wait for the iPhone 5 since the device's late-September launch, analysts said. The scarcity of the phones has been weighing on Apple's share price as well, as investors are concerned Apple may not be able to meet consumer demand in the near future, weighing on its earnings.

"Market demand is very strong, but we just can't really fulfill Apple's requests," Taipei-based Hon Hai Precision Industry Co. Chairman Terry Gou told reporters on the sidelines of a local economic forum.

Mr. Gou declined to say which of the phone's design features has caused production issues and how long it will take for those issues to be solved. He also refused to comment if Hon Hai plans to outsource some of the iPhone orders to other makers, or to its Hong Kong-listed subsidiary Foxconn International Holdings Ltd. as some analysts suggested last week.

Apple didn't immediately respond to requests for comment.

Foxconn said one of the reasons for the delay is not just the demand, but also the higher quality standards of the phone make it more difficult to produce.

This doesn't surprise me one bit. You always hear this kind of thing with whatever the hottest new gadget is, and these "shortage" stories always seem to come out just in time for the holidays. I don't doubt that the manufacturer could be having problems, but don't be surprised if you hear more of these kinds of stories popping up during the holidays.