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Been flipping iPhones for a long time and have plenty of experience tearing them down and reassembling. I just did a full work up on on iPhone 7 I got from eBay. New frame and refurbished apple display; was very gentle and used heat for removing sticky flex cables. Finally got it to where I could test it before it was fully assembled it worked perfectly! Touch ID and the home button were working. As soon as I put the phone together and powered back on, it was taking forever to boot and once it was back up, the home button worked but touch id wasn’t responding anymore. I never got the “touch id can’t be activated on this iPhone" message. I figured, hmm maybe a ribbon cable wasn’t seated all the way. I opened it back up, disconnected the battery and re-seated everything and now I have no touch ID or home button at all. I tried disconnecting the front camera flex as some threads suggested and no luck. I can record voice memos and siri is just fine so I know its not the audio IC. Is there anything else I can try?
The iPhone 7/8 series have a very inconvenient bend on the Home Button flex. It’s really easy to tear the flex, either near the logic board connector or at the 90 degree bend before it sneaks underneath the LCD heat shield. You have to be careful when you lift the screen off the first time but also anytime the flexes are connected and you have the device open. The other area that is easily damaged is the connector on the Home Button itself and the opposite connector on the short flex that runs underneath the heat shield. The long and short of it is that there are multiple failure points, as you well know. You will need to carefully inspect the Home Button and flex to see if there is any damage. Magnification here will help. Look for tears to the flex or any physical signs of damage. I have seen many phones where the tear is so tiny, it’s hard to believe it causes any issues…yet it does. You should also check the connector to insure none of the pins are damage or that there isn’t any debris.