Foxconn says the iPhone 5 is the most difficult device they've ever assembled, hopes practice will make perfect

iPhone supply shortages happen almost every year, but with the iPhone 5 they've been compounded by quality assurance concerns -- namely chips and scratches occurring at the factory before the devices are as much as opened by customers. A Foxconn/Hon Hai official, who declined to be named, told Lorraine Luk of the Wall Street Journal that it's hard to satisfy both aesthetic and practical needs:

The iPhone 5 is the most difficult device that Foxconn has ever assembled. To make it light and thin, the design is very complicated. It takes time to learn how to make this new device. Practice makes perfect. Our productivity has been improving day by day.

This is nothing that anyone looking at working conditions in China and the complexity of the new iPhone assembly and finishing process couldn't reasonably deduce all on their lonesome (add your own cliche about good, fast, and cheap here).
As to rumors of a labour dispute compounded by the iPhone 5 production difficulties, the same executive waved the "stay clam, carry on" banner.

The Zhengzhou site, which was set up in 2011, is still pretty new to us. We are still learning how to manage the work force there.

Apple pushes the bleeding edge when it comes to manufacturing, inventing a lot of their own processes along the way. Quality will no doubt improve over time, whether or not it eases worker strife.