Apple’s new iPad display may be causing a supplier shakeup

August 7, 2012 — Apple’s new iPad uses a 9.7” QXGA display, which is difficult to manufacture with existing thin-film transistor liquid-crystal display (TFT-LCD) processes, due to the high resolution and strict quality requirements. This may be causing Apple to adjust its display panel supplier mix or cut back production, according to a blog by David Hsieh, VP, Greater China market of DisplaySearch.

Hsieh reports that speculation is revolving around Apple’s production volumes for iPad panels, which he says is “likely a case of Apple and its suppliers trying to gain leverage on each other.”

Various theories have been floated as for why Apple would reduce iPad display panel production: increased Foxconn inventories, unsatisfactory cost-reduction plans at panel and component suppliers, saturation in the market, panel supplier mix changes due to the challenging manufacturing requirements, and potential new iPad models like the “mini.”

Hsieh suggests that — if Apple is actually cutting production — some capacity dedicated to iPad panel production would be released, increasing oversupply.

Some panel makers, like LG Display and Sharp are using advanced Gen-8 LCD fabs to produce tablet PC panels, DisplaySearch reports, and some are ramping up oxide TFT (OTFT) technology for iPad panel production. The high resolution and quality requirements for the new iPad panel, as well as the mix of TFT technologies being used (a-Si and oxide) could make Apple adjust the mix of panel suppliers. Apple’s preference is to use oxide in the panels for the new iPad, as this technology enables the use of smaller transistors in each pixel, allowing more light from the backlight to pass through. This allows for higher battery life or brightness, Hsieh said. Challenges in producing OTFT have limited its use. The degree to which those challenges can be mitigated in the short term may affect not only how widely oxide is used but also the bill of materials cost.

Other considerations, like panel prices, are covered in Hseih’s blog post, “Mixed Signals On iPad Panel Production,” at http://www.displaysearchblog.com/2012/07/mixed-signals-on-ipad-panel-production/.

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