Apple products such as the iPad, and iPhone continue to stress the LCD supply chain, given their cutting-edge performance specifications and strict quality controls. There is a saying in the LCD business that Apple might be the most knowledgeable company about LCD manufacturing and technologies that is not an LCD manufacturer. However, Apple’s business is attractive to the LCD supply chain because it offers high volumes of a single model, which enables production stability. At the same time, Apple displays offer higher ASPs due to the specifications (such as slimness, light weight, high resolution, low power consumption, high color saturation and wide viewing angle). In order to secure allocations and technology access, Apple has been investing in the LCD supply chain in Asia, particularly down payments to LCD panel makers for strategic supply agreements.
The LCD supply chain (including panel makers, component suppliers, subcontract manufacturing companies) has started to gear up for Apple: in the second half of 2012, Apple will launch three new products (a first): iPhone 5, iPad Mini and New iPad refresh model. These mobile devices will require displays with high resolution, slim form factor, light weight and low power consumption. And certainly, these features are keeping the LCD supply chain very busy.
DisplaySearch’s estimates of near-term production for these Apple products are shown in the table. The LCD supply chain companies involved in the Apple new products include Corning, Japan Display, LG Display, Sharp, AUO, Chimei Innolux, Samsung, Radiant, Coretronic, TPK, Wintek as well as Foxconn.
Production forecast for Apple products (Million units)
|Product||Panel & Touch Feature||Aug||Sep||Oct|
|iPhone 5||4.0” LTPS 326ppi, In-Cell Touch||13||20||26|
|iPad Mini||7.85”XGA IPS, film Type P-Cap touch||1||3||5|
|iPad 2||9.7” XGA IPS||2||2||2|
|New iPad + Refresh||9.7” QXGA IPS||5||4||7|
Source: NPD DisplaySearch Estimation
Each of these products will present challenges to the LCD supply chain. First, the iPhone 5: while not disclosed publicly yet, many believe the panel size will be increased to 4.0” from 3.5” in the iPhone 4S, while the resolution remains at 326 ppi. The technology breakthrough will be the in-cell touch sensor integration, which presents a big challenge for LCD suppliers to maintain good yield rates.
The iPad mini is expected to launch in Q4’12 as well. Compared to the iPad, the smaller 7.85” screen is targeting the segment of the market currently addressed by Amazon, Samsung, and Google. The ultra slim form factor and low power consumption LCD is the key, as well as the film type projective capacitance touch panel.
Third is the iPad 2. Apple’s original plan for the new iPad was to phase out the iPad 2, but it seems the LCD supply chain is continuing production through the end of this year.
The last is the new iPad and a refreshed model of the new iPad. The new iPad leads the tablet PC market with its high resolution (9.7” QXGA with 200+ ppi) and high color saturation. However, Apple is working with the LCD supply chain to refresh the display, including revising the LED backlight design for cost reduction, refining the thermal solution, reducing the weight by replacing some components, and fine tuning the panel transmittance for lower power consumption.
In our various reports, we forecast that iPad 2 shipment will be 21M in 2012, iPad 3 will be 43M, and the iPad mini will be 8M. For iPhone 4S, we expect the 2012 shipment will be 105M, and iPhone 5 will be 35M.
All of these panels are recognized as difficult to make in a stable yield rate and will take away some LCD capacity. The bright side for the LCD supply chain is the high technology hurdles of Apple’s mobile product help to digest some capacities and enhance the ASP. However, the dark side is that as Apple products have become more popular, many end users are postponing purchases in anticipation of the new releases, while other products are impacted, and their brands’ orders to the LCD supply chain may be reduced.
The dynamic indicates that Apple’s business is like a dual-edged blade for the LCD supply chain. But with the company launching so many new products in 2H’12, engaging many 1st tier LCD suppliers, we can expect the LCD industry to become very dynamic once again.