Reuters: iPhone 5S delayed as coating material interferes with fingerprint sensor

iPhone 4 promo vide (manufacturing process 001)

Apple’s perfectionism is legendary. Good enough just doesn’t cut it for a company whose exacting demands often drive its suppliers and manufacturing partners crazy. This even includes construction companies tasked with building Apple’s upcoming iSpaceship campus with four times narrower gaps between surfaces versus the U.S. construction standard.

We learned earlier this morning that Apple may have returned up to eight million iPhones to Foxconn, apparently because the unites were not fit for sale, potentially costing the contract manufacturer north of $1 billion to make replacements. In fact, Apple’s hard-to-meet standard and various manufacturing challenges could reportedly delay the next wave of iDevice upgrades until Fall.

And today comes another confirmation that Apple won’t launch the iPhone 5S this summer because it is still trying out various coating materials in the hope of finding one that won’t interfere with the handset’s fingerprint sensor…

Reuters reports that indications of reduced shipments are ticking Apple’s suppliers off, as their own revenues depend on orders from Cupertino, California.

Apple shares closed the week below $400, a far cry from the September 2012 peak of $700+ a share and a new low for the firm since December 2011.

An Apple supply chain source in Japan said those in the industry often jokingly refer to the company as “Poison Apple” because of its hard-to-meet high standards and low price expectations.

Here’s a video by Bloomberg TV.

The report also mentions supplier initially expected mass-production of the next-gen iPhone to begin in June, but “that date may have begun to slip beyond June”, according to the sources.

The phone, widely referred to as the iPhone 5S, is expected to include new features such as a fingerprint sensor.

A supply chain source in Taiwan said Apple was trying to find a coating material that did not interfere with the fingerprint sensor, and this may be causing a delay.

iPhone 5S fingerprint sensor (KGI Securities 001)

Reuters also mentions that small-scale production of budget iPhone screens will begin in May, ramping up to mass production in June.

Both the iPhone 5S and budget iPhone will feature the same four-inch screen, but the budget model “will probably not include the new fingerprint technology and sport a cheaper plastic casing.”

Foxconn, which is said to owe as much as 60 percent of its revenue to Apple, posted a nineteen percent decline in sales in the first quarter compared with a year earlier, hurt by iPhone seasonality.

Apple’s recent stock tumble is attributed to Cirrus Logic reporting weak results and warning of reduced forecasts from one customer, assumed to be Apple. More than 90 percent of Cirrus sales come from Apple.

In turn, shares of other Apple suppliers declined, including those of chipmaker Qualcomm, Japan’s Toshiba Corp and LG Display, which owes an estimated 30 percent of its total revenue to Apple.

Analysts expect Apple will report a mere eight percent increase in revenue in its fiscal 2013 second quarter, with profits potentially falling for the first time since 2003.

Apple is scheduled to release its quarterly earnings Tuesday, April 23. iDB will be on hand covering the most important metrics as they are released.