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Tuesday, October 02, 2012, 05:05 am PT (08:05 am ET)

Yield rates for Apple's iPhone 5 in-cell touch panels improving

After some initial issues with creating in-cell touchscreen displays for Apple's new iPhone 5, yield rates are said to be improving, helping to ease constraints.

Analyst Shaw Wu with Sterne Agee said on Tuesday that the main issue for Apple now in meeting demand for the iPhone 5 is simply assembly of the iPhone 5 itself. In his words, Apple's latest handset is "not easy to build."

"AAPL has very high standards where it aims to produce each model to be an exact replica where variance is measured in microns," Wu wrote in a note to investors.

He believes Apple sold 27 million iPhones in the just-concluded September quarter. For the current December quarter, he believes the company will sell a record-setting 46.5 million iPhones with "room for upside."

That upside will depend largely on Apple's ability to meet demand for the iPhone 5. Wu said he views current production issues associated with the iPhone 5 as short-term problems.

iPhone 5


In addition to the in-cell touch panels, Wu said previous bottlenecks to production also came from integrating 4G LTE wireless capability into a 28-nanometer fabrication process. He also said the aluminum and glass casing design of the iPhone 5 had caused some issues in the supply chain.

New iPhone 5 orders from Apple's online store in the U.S. are scheduled to ship in three to four weeks for all models. The iPhone 5 is now available in a total of 31 countries, and will have launched in more than 100 countries with 240 carriers by December.

Sterne Agee has maintained its "buy" rating for AAPL stock with a price target of $840.