The iPhone 4S on display at a store in Sichuan. (Photo/Xinhua)
Apple is set to postpone the debut of its iPhone 5 because high-end chips used in the device are in short supply, reports the Shanghai-based First Financial Daily.
The newest generation of the iPhone uses chips manufactured using 28-nanometer fabrication, an advanced production technology known only to a few companies, said Gu Wenjun, an analyst with market research firm iSuppli.
Apple's leading chip supplier, Qualcomm, will be able to tackle the 28nm chip undersupply only by the end of this year, said Qi Fei, a spokesman for Qualcomm China. The problem arose during the second quarter of this year, as demand for 28nm chips has been growing alongside the popularity of smartphones.
As part of its efforts to resolve the undersupply problem, Qualcomm entered partnerships with South Korea's Samsung and Taiwan-based United Microelectronics to manufacture chips, said the daily.
As Apple keeps firm control over its inventory, it is cautious about selecting new suppliers. Its heavy demand for components often drive suppliers to operate at full capacity. Partners must meet Apple's tough demands or risk losing a major buyer; its production chain consists of 156 companies.
This means any single supplier that fails to pull its weight can undermine the entire production chain, said the daily. The shortage of high-end chips could affect the supply of smartphones produced by Chinese brands Xiaomi and 360, as they also rely on Qualcomm for 28nm chips.
The postponement of the iPhone 5 launch will give Apple's lead rivals — HTC and Samsung — a much-needed reprieve, as their phones won't have to compete with the iPhone 5 head-on.