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Here's Why This iPhone X Conspiracy Theory Is Bogus

Anybody following the press reports around Apple's (NASDAQ: AAPL) iPhone X are probably aware that the phone is proving quite tricky to manufacture.

Nikkei Asian Review, for example, says that the TrueDepth camera system exclusive to the iPhone X is still proving difficult to build. One analyst quoted in a Nikkei Asian Review story -- Jeff Pu with Yuanta Investment Consulting -- even said that due to these manufacturing difficulties, he's reduced his iPhone X shipment expectations for calendar year 2017 to just 36 million units, down from 40 million units.

A woman standing on a beach and looking at an iPhone X.
A woman standing on a beach and looking at an iPhone X.

Image source: Apple.

Whenever these reports of manufacturing troubles for new iPhones make the rounds, some are quick to claim that they are put out there to stimulate demand for the new phones. After all, if people believe that an item they want will be hard to get, they are more likely to aggressively try to buy it as quickly as they can.

There are even those that take this reasoning a step further: They don't necessarily think that the reports are designed to misrepresent the state of iPhone production. Instead, they appear to believe that Apple is intentionally keeping supply low to create excitement and spur demand.

Time and again, these conspiracy theories make the rounds, and time and again, they don't make sense. Here's why.

iPhones don't have long shelf lives

Everybody knows that iPhone product cycles are one-year long. A lot of buyers understand that within a year after an iPhone launches, a new one will hit the market, which is a major reason that iPhone sales within a given product cycle tend to peak during the first full quarter of availability and decline from there.

It's not just the impending launches of future iPhones that Apple needs to deal with over the course of a product cycle, though. Increased competition is also a major factor.

And Apple isn't dragging its feet in producing the newest iPhones because it only has a limited window in which to exploit its advantages over competitors. For instance, rumor has it that Samsung (NASDAQOTH: SSNLF), Apple's main rival in the premium smartphone market, will adopt the signature feature of the iPhone X -- 3D sensing for facial recognition -- in its upcoming Galaxy S9. The Galaxy S9 should launch either in March or April, which means that Apple has a relatively narrow window of opportunity within which to exploit 3D sensing as a unique selling point. The longer it takes to fill demand for the iPhone X, the smaller that window is.

It is in Apple's best interest, then, to make sure that it can get innovative new products to market in large quantities as quickly as possible.

So, I believe that the struggles that Apple and its suppliers are reportedly having in trying to manufacture the 3D sensor components in high volume are real and that the company isn't artificially limiting the manufacturing output of its iPhone X to create artificial demand.

More From The Motley Fool

Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

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