Apple Watch: Blame the Displays

The new iPad — not to be confused with the iPad 2 — will go on sale tomorrow. Whether you actually get your hands on one will likely depend on your ingenuity or your willingness to camp out overnight in front of a retail store. It has been widely anticipated that iPad supply will not meet demand, and IHS iSuppli has given some indication why: There are not enough displays.

The displays on the new iPad are getting rave reviews. Apple is releasing a product with the new, higher-resolution Retina displays, instead of a smaller, less expensive iPad, as was anticipated just a few weeks ago. (See: Behind Apple’s Alleged Move to Small Screens.) Here is some of the feedback.

First, from the New York Times:

In principle, that avalanche of pixels (and their increased color saturation) means that photos, videos, maps and text should look jaw-droppingly good — and, in apps that have been rewritten for the new screen, they do. Apple’s own apps, like Photos, Maps and iBooks, are just incredibly sharp and clear.

Here's a review from the Wall Street Journal:

Using the new display is like getting a new eyeglasses prescription — you suddenly realize what you thought looked sharp before wasn't nearly as sharp as it could be.

IHS iSuppli reports that Sharp and LG Display, two of the three display makers that supply Apple, have had difficulty reaching production volumes:

Although they are currently shipping displays in small quantities, LGD and Sharp are expected to ramp up volume production of new iPad displays in April. IHS predicts that Apple is likely to begin shipping new iPads with displays from these suppliers in the second quarter.
Sharp is working with a new IGZO technology that enables higher resolutions. The company now is working to ramp up the production of IGZO TFT panels at its Gen 8 fab in Kameyama, Japan, but the company is experiencing manufacturing problems that could affect both the availability of displays for a full rollout of the new iPad, as well as the cost of the iPad displays.
LGD has been pioneering the use of advanced in-plane switching (IPS) display technology, particularly in media tablet displays. The company is the leader of the media tablet display market, with a 44 percent share of global unit shipments for full year 2011. Samsung, in comparison, accounted for 35 percent share of the tablet display segment, with Taiwanese and Chinese display suppliers making up the remainder of the market share.

The display situation is curious on a number of levels. First, the LCD display market has been suffering for months and is so challenging that Samsung is spinning off its display business. (See: Is Samsung LCD Spinoff the Right Move?) In its most recent quarterly report, LG blamed the display business for its less-than-stellar performance. Sharp has been fairly quiet of late.

There is no shortage of capacity, at least for last-generation displays. There seems to be a big opportunity here for display makers, but they have missed the boat.

In the meantime, Samsung and Apple are embroiled in a number of lawsuits. This is not to imply Samsung is holding back. In fact, the buzz about the new iPad suggests it stands to clean up on display sales. Displays are now arguably the biggest and most important feature of a tablet, with battery life being a close second.

So it appears Apple didn't underestimate demand for the iPad. It underestimated its suppliers' production ability. In spite of their long manufacturing history, displays are actually tricky things to make. Any change in panel size can set off a whole chain reaction of problems. And a display as eye-popping as the Retina no doubt has a new set of challenges. So if you cannot get your iPad tomorrow, blame the display industry. But it sounds like the display might be worth the wait.

13 comments on “Apple Watch: Blame the Displays

  1. Cryptoman
    March 16, 2012

    I cannot believe how the shortage in supply of displays come up after the product has been rolled out. Did Apple not check whether the required number of displays could be supplied by the manufacturers in the first place? Apple is supposed to be experienced in all this and should have managed such risks much more professionally and in time. I don't think Apple can make such a big and obvious mistake like that.

    I am wondering whether this is a simple case of a marketing move to give the impression that the new iPads are short in supply. Therefore, even the potential customers who cannot decide whether to buy the new iPad jump on board and buy one because they don't want to miss the valuable opportunity due the supply problems. Most people feel privileged by having something that others don't and this is a perfect weakness waiting to be exploited by sales and marketing teams. I wonder if Apple is actually using this consumer psychology with the new product roll out.

    March 16, 2012

    If new IPAD is an AMOLED display I think Samsung is not selling that business, only the traditional LCD business.

  3. Barbara Jorgensen
    March 16, 2012

    @Cryptoman: It is widely believed that at least part of this craze has been orchestrated by Apple, but I doubt we will ever know for sure. As for displays, Apple invested more than $3 billion a little over a year ago to secure supply. As a supplier, I wouldn't want to irritate Apple. On the other hand, supplier Samsing and Apple are suing one another. The supply chain makes for strange bedfellows.

  4. Barbara Jorgensen
    March 16, 2012

    @SCOT: I believe Samsung is spinning off the LCD busiess but will continue to own it. I'm not sure if the Retina display, which is on the new iPad, is an OLED.  I know the Retina manufacturing technology has to be licensed and there aren't a lot of factories with the capability.

  5. elctrnx_lyf
    March 17, 2012

    Displays are certainly very challenging to manufacture considering the fact that any defects will immediately be seen through picture quality or through the life of display itself. Anyways I belive LG, Sharp and Samsung together could easily provide the apple with the required volumes of displays.

  6. syedzunair
    March 17, 2012

    Barbara, you are right. We might never know for sure. I think it doesn't seem logical for Apple to restrict supply intentionally. They already have high brand loyalty and most often than not their products do well on the market. With such consumer loyalty a brand would not limit supply intentionally as it will produce some unsatisfied customers. 

  7. Nemos
    March 17, 2012

    “So it appears Apple didn't underestimate demand for the iPad. It underestimated its suppliers' production ability” It seems to be like that, although I have my doubts about it. It is the second time that this happening so it looks like a marketing trick rather an underestimate demand.

  8. t.alex
    March 18, 2012

    Yes, it is normal LCD business.

  9. Daniel
    March 19, 2012

    I think Apple may equip with enough number of display panel stocks. Normally there is a large initial pull for almost all Apple products and the same may happen for IPad 3 also. My doubt is for a handy device like IPad, whether such high resolution display is required or not?.

  10. Himanshugupta
    March 19, 2012

    It is a case study in itself as how Samsung can keep its two frong strategy; on one hand it is one of the biggest challenger to Apple products and on the other hand the critical supplier. 

    I do not know whether Samsung benefitted from being a supplier to Apple as it could get an advance knowledge to what Apple is doing next!

  11. Barbara Jorgensen
    March 19, 2012

    Readers: I was curious about the display situation so I did some research: Retina ia an Apple trademark, so Apple licenses the manufacturing of the display. I was curious because, if Samsung owned the trademark, why doesn't Samsung capitalize on it? So the answer is Apple outsources to Samsung. It also looks like Samsung is the only producer right now manufacturing volume of the Retina. So this is really good for Samsung, as the display on the iPad is the single most expensive component on the evice. IHS iSuppli breaks down the iPad BOM under Latest Research on this page.

  12. bolaji ojo
    March 19, 2012

    Barbara, Part of the challenge suppliers must face is finding volume purchasers for the product. Apple is in a position where it can dominate its supply base because it is a volume buyer. Even if Samsung wants to sell to other companies there aren't that many other volume buyers like Apple around. Paradoxically, Samsung is one of the few companies that has the same volume requirement as Apple. Only a few other companies are out there.

  13. Barbara Jorgensen
    March 21, 2012

    Bolaji–too true. That's the main reason any company that has Apple as a customer shouldn't miss production goals. It hasn't hurt the iPad, though, it is still selling like hotcakes (pun intended)

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