Hey Buddy, good questions and good research.
Basically yes & no.
YES supply issues & NO, they are not discontinued.
The grey Market as Amal explains it…
Long story short, DT are out of stock, but when or if he finds some more chips, I’m certain there will be a new production batch.
When? nobody knows unfortunately
I have mentioned this in a few posts, I understand the hesitance, however, from personal experience, there is very little difference between an xSeries and a Custom needle Flex series install.
It affects the installer more the the recepient.
In the case of the xM1 vs FlexM1, the needle size isnt too dissimilar
If you are referring to your right hand thenar space, ( between thumb and forefinger) you are correct.
However, ideally this is not where you would want to place one. ( Although called Flex, this refers to the encapsulation material rather than the implant properties )
You would be looking more at P 1-5 ( P for Position - either hand )
Reference
Other locations are available 
I have both, (xM1 and FlexM1 gen2) I find them both very useful. But the FlexM1 has better read range ( Obviously ) and in my case, I use my FlexM1 more, due to the convenience of the gen2, where I can write to it with my phone.
Read about the Differences between gen1a and gen2 in Jirvins fantastic thread here
Magic Mifare Chips
Compatible readers are commonly used in a variety of places, some common examples, but not limited to:-
Access systems
Hotels
Cheap Chinese locks in all shapes and sizes
the list goes on…
In my opinion, the most common HF chips you will find. A very good good option.
If a Mifare Classic Magic implant is what you are wanting, I would reccomend a FlexM1 gen1a for you.
But do you have a proxmark?
D. not at all ! ( as long as you get good placement )
I have had zero issues, any faults seen mentioned on the forum are GENERALLY user based.
If there are any manufacturing issues, DT will put it right. *
Fantastic customer service.
Dont hold your breath, as it is still reliant on the grey market, but there are plans for an xMagic - planned to be a 2in1 like the NExT Implant but with xEM and xM1 chip (possibly gen2)
whensoontm.com
There is no indication when or even if this will happen, so, Get yourself a FlexM1 in the mean time
You are welcome very much
Me