‘More Than Typical Tightness’ in Early iPad Mini Supplies, NPD Says
Initial supplies of the new iPads announced Tuesday by Apple are likely to be more limited than usual, NPD DisplaySearch analyst Richard Shim said in a blog post Wednesday. The shortage will hit the iPad Mini harder due to its lower price, which will attract a broader audience, and constraints in the supply chain “point to an even more than typical tightness” for the 7.9-inch tablet, Shim said.
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Apple will continue to work with LG Display for LCD panels for the Mini that will be produced by Foxconn, Shim said. Apple also added AU Optronics as a 7.9-inch panel provider but the supplier is having yield problems with the smaller display, having shipped just over 100,000 units in September to contract manufacturer Pegatron, Shim said. Plans call for production to reach 400,000 units this month, 800,000 units in November and 1 million units in December, Shim said. LG Display, meanwhile, shipped 300,000 panels in September, and plans to ship 1 million units in October, 2.5 million in November, and 3 million in December, Shim said.
Although Samsung has been one of the leading panel suppliers for the iPad -- and the only supplier that could meet production orders when the new iPad was first released before LG Display ramped up production -- the company seems to be “winding down” its relationship with Apple, Shim said. He attributed the cooling relationship to recent legal proceedings between the companies, while noting that in previous iPad launches, LG and Samsung were the main panel suppliers.
On who will benefit the most from limited supply of iPad Minis, Shim told us tablet makers in the $199 segment, including Google and Amazon, should benefit since Apple has no presence there. Amazon’s splash page Wednesday featured the $199 Kindle Fire HD that’s currently available, along with the $119 Paperwhite e-reader and Kindle Fire HD 8.9-inch models due to ship in late November. The larger Kindle Fire models “took a little longer” to get adequate panel supply from suppliers LG Display and Panasonic, Shim said.
Despite spotty supply issues on the panel side, DisplaySearch is sticking to projections of 124 million tablets shipping this year, up 53 percent from 2011’s 78.4 million unit shipments, Shim said. “Other than spot issues,” such as the limited supply of 7.9-inch screens for the Mini, “there shouldn’t be an issue” in reaching 124 million units, Shim said, because panel suppliers are investing more in the tablet space. As sales growth in TVs and notebooks slows, suppliers are shifting production capacity to smaller-sized panels for mobile devices where supply is “becoming pretty abundant,” he said. Generation 6 and 8 panel factories once set aside for TV and notebook PC panel production are being converted for smaller panel sizes “where the growth is,” Shim said. The growth in tablet demand and shift for computing devices away from the “performance-oriented” notebook to the “convenience-oriented” tablet “foretells the day when tablet shipments will pass notebook shipments,” Shim said. DisplaySearch projects that will occur in 2016.
Panasonic, for one, plans to cut output of LCD TV panels to switch more production lines to higher-profit tablet panels to vie for orders from Apple, according to a report in China Economic News Tuesday. Citing local news reports, CENS said Panasonic’s Himeji plant, activated in 2010 primarily for TV panel production, has now dedicated about half of its production lines for small and medium-sized panels for mobile devices, according to the report. At CEATEC, Panasonic told us it is weighing converting an 8G line at Himeji into a 5.5G facility for OLEDs but no plans were definite (CED Oct 3 p1).