Apple has been encountering setbacks in the engineering test phase of its first foldable iPhone, which could lead to delays in its mass production and product shipment schedule. These issues in engineering development could delay the first shipments of the foldable iPhones by months in a worst-case scenario.

According to the Nikkei report, more issues than expected have emerged during the early test production phase, and additional time will be needed to resolve them and make necessary adjustments.

"It's true that more issues than expected have emerged during the early test production phase, and additional time will be needed to resolve them and make necessary adjustments," the report said, by quoting one source familiar with the matter.

Reuters however, could not verify the report. Apple did not immediately respond to Reuters' request for a comment outside regular business hours in the United States.

Nikkei had reported in January that Apple would focus on delivering its first foldable iPhone and two non-folding models with upgraded cameras and larger displays for a flagship launch in the second half of 2026.