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KeyBanc analyst says Apple only has weeks to resolve its fingerprint issue


Apple is struggling with fingerprint recognition capabilities for the upcoming iPhone 8, and only has a couple weeks to resolve the issue before it affects its earnings estimates, according to a report by Barron’s.

The review comes from KeyBanc Capital Markets analyst Andy Hargreaves and his colleagues John Vinh and Josh Beck, following recent conversations Hargreaves had with the electronics supply chain.

“Apple continues to struggle with the workaround for the fingerprint sensor,” writes Hargreaves. “This increases the potential that the new OLED iPhone could be delayed, or ship without a fingerprint sensor, either of which could increase risk to unit sales and mix for the cycle.”

Hargreaves said that Apple continues to face challenges related to placing a fingerprint sensor in the screen of the new iPhone, which will likely be comprised of organic-light emitting diode (OLED) technology in a first for the iPhone.

However, time is running out as Apple only has until August to either order chips to run a fingerprint sensor, eliminate the fingerprint identification component from the device all together, or postpone the new iPhone’s release.

The analyst said it typically takes 12 weeks from placing fingerprint IC orders to completing a full volume production of iPhones.

Based on this estimate, Apple could reach volume production in late October or early November if it is able to rectify the fingerprint issue and place orders for fingerprint ICs before August.

Hargreaves and his colleagues speculate that this would be Apple’s preferred path, as well as one that would appease both consumers and investors. It remains to be seen whether Apple will be able to resolve the issue in this time frame.

He also said that releasing an iPhone without the fingerprint sensor feature might prevent users of the new device from being able to access the company’s Apple Pay service.

Eliminating the fingerprint sensor entirely and relying completely on facial recognition for login and authentication is the option that is looking more likely for Apple.

The analysts said this would be far from ideal because while Apple’s facial recognition technology should work from various angles and in low-light environments, it would not work without clear line of sight to the user’s face.

And although this would hypothetically occur on an infrequent basis, it would still mean that the new iPhone’s authentication and login capabilities would perform worse than older iPhones, which could result in a loss of consumers.

Additionally, the analysts said that it is still unknown whether the facial recognition technology would be initially qualified as an acceptable verification method for Apple Pay.

Hargreaves said that if Apple significantly delays the release of the new iPhone, it could hurt its 2018 sales.

Previously reported, Apple Inc. is developing a new 3-D face scanning feature that will allow users to unlock their iPhone using their face instead of the existing fingerprint recognition login.

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