Apple Inc.’s (AAPL) iPhone 8 Battery Issues Are … Good News?

The good news is the iPhones didn’t explode or catch fire

Apple Inc. (NASDAQ:AAPL) continues its investigation after reports that two new iPhone 8 smartphones burst open after what appears to be a battery failure. Considering the nightmare that Samsung Electronics went through last year with the Galaxy Note 7’s exploding battery, the implications for AAPL stock are considerable.

Apple Inc.’s (AAPL) iPhone 8 Battery Issues Are ... Good News?

However, at this stage of the game, it appears that Apple is not facing anything so dramatic as Samsung’s recall. In fact, the current iPhone 8 battery issues may actually be good news for Apple.

Here’s Why.

Reports of Two iPhone 8 Battery Failures

Late last week — just days after the new iPhone 8 series hit store shelves — two reports surfaced of apparent iPhone 8 battery failures. Both smartphones involved were the larger iPhone 8 Plus model, one in Taiwan and the other in Japan. And in both cases, the affected iPhones burst open, with the display popping free of the aluminum band that attaches it to the glass back.

The Taiwanese iPhone 8 owner pointed out that only an official power adapter had been used. Apple faced a series of iPhone 6 battery fires last year, that were ultimately blamed on the use of cheap knock-off power adapters. However, that would not seem to be the culprit this time around.

The optics of the burst iPhones were not good, with photos of the damaged devices hitting social media. An Apple spokesperson confirmed the issue, telling MacRumors the company is aware of the problem and “looking into it.”

The Good News About the iPhone 8 Battery Failure

With the investigation in its early stages, we don’t yet know for certain that the iPhone 8 battery is to blame for the bursting smartphones. However, it seems likely. Lithium-ion is extremely volatile and batteries that fail often expand rapidly. It’s the most obvious explanations for the affected iPhones bursting.

But the reported incidents could actually be good news for Apple, despite the bad optics.

Every component in a smartphone has a fail rate, and that includes the battery. When tens of millions of units are being produced, it doesn’t matter how good the quality control is, there are going to be some failures. With Lithium-ion battery packs, failure often means a battery pack that swells as gasses are produced. In the case of the Galaxy Note 7, that failure rate was very high because of poor battery design. But with the Galaxy Note 7 — and to a much lesser extent, the iPhone 6 — those battery failures were worsened by a smartphone design that confined an expanding battery pack.

Rather than explode, or have an internal component pierce the battery pack causing a fire, the two iPhone 8 battery packs appear to have had sufficient pressure to pop the smartphones open. That doesn’t look great, but it’s a much less dangerous outcome than a fire or explosion. That may or may not have been an intentional design choice on Apple’s part, but at the end of the day Apple is facing the probable replacement of two iPhones instead of a potential lawsuit over an exploding iPhone 8 injuring someone or burning a house down.

You can bet Apple investigators will be examining those damaged iPhones very closely and having a conversation with their battery supplier. However, two iPhones suffering an apparent battery failure out of the millions Apple has likely shipped at this point is not a cause for panic — especially when the failures didn’t end in flames.

The Galaxy Note 7 battery caused a massive public relations nightmare for Samsung, and it ended up costing the company billions of dollars. AAPL stock has been on a downward trend in the aftermath of the September iPhone event, but there shouldn’t be any worries at this point that the recent iPhone 8 battery issues are going to explode in investors’ faces and make things worse.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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