Here's why Apple can't make enough Apple Watches

Business Insider

Apple may have found a key component inside the Apple Watch to be defective, according to The Wall Street Journal.

The watch's taptic engine, or the component that simulates the feeling of being tapped on the wrist, seems to be the issue.

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Apple is in the process of shifting all production of these taptic engines to another supplier, which is why it's having trouble keeping up with demand.

As a result, Apple will have to limit the watch's availability, the report says. Taptic engines specifically produced by AAC Technologies Holdings are the ones that seem to be affected.

These engines are breaking down over time, and Apple even had to scrap some of the watches it already produced, according to the report.

The taptic engines produced by Apple's other supplier, Nidec Corp., are not experiencing the same problem. Apple is moving all production over to Nidec, but it will take time for Nidec to ramp up its production.

Apple has also been telling some of its suppliers to slow production until June without providing an explanation, the report says.

The news comes just a few days after the Apple Watch's official launch on April 24. Only about a quarter of those who ordered watches during the preorder period actually received the watch upon its release, according to data from Slice Intelligence.

Last week Angela Ahrendts, Apple's senior vice president of retail, sent out a video memo to employees that suggested the Apple Watch launch might not have gone as planned.

In the video, she acknowledges that Apple Store employees have been bombarded with questions about availability.

When the Apple Watch went up for preorder on April 10, it sold out almost immediately. Some orders have been pushed back for multiple weeks, meaning that certain buyers may not get their watch until June.

Still, on the company's most recent earnings call CEO Tim Cook said Apple was able to deliver more watches than it had anticipated on launch day.

"With any new product, you take some time to fully ramp," he said on the earnings call. "We are in a good position."