There’s no denying that monumental smartphone demand has OEMs frantic to ensure their reliability of their supply chain. Apple is apparently tapping some of its seemingly bottomless cash reserves to secure display technologies for the iPad and iPhone.
Citing comments made by Apple’s COO Tim Cook at the company’s Jan. 18 earnings call, IHS iSuppli extrapolates that Apple has committed $3.9 billion to secure production of the company’s retina displays.
Based on an analysis of Apple’s existing supplier relations, intellectual property ownership and licensing and technology, IHS iSuppli believes the companies tapped to fulfill orders for advanced LCD displays over a two-year period may be LG Display, Sharp Corp. and Toshiba Mobile Display.
“In the era of the iPad and iPhone, the user interface – particularly the display and touch screen – has become the most critical competitive differentiator for tablets and smartphones,” noted Vinita Jakhanwal, director for small and medium displays at IHS, in a statement, citing high demand as the reason Apple has decided to secure its display supply.
IHS iSuppli estimates that Apple spent nearly $2 billion on displays for its iPad and iPhone lines in 2010, sourcing LCD panels from LG Display, Samsung Electronics, Sharp and Toshiba Mobile Display.
Apple laying claim to a major share of global output of IPS LCD and LTPS LCD panels could have implications for all competitors in the smartphone and tablet market.
Jakhanwal notes that because IPS LCD production is limited to suppliers that own or have access to the IPS license, it is a challenge to match demand to suppliers that own production capacity and IPS licenses. She also said that manufacturing yields associated with IPS LCD are still poor, but the only alternative is Samsung’s AMOLED panels, which have “gone into a state of critical shortage.”
“With Apple trying to invest in assuring IPS supply, and Samsung Electronics having preferential access to small- and medium-sized AMOLED supply, the rest of the smartphone makers are caught between the two giants,” Jakhanwal said. “This has left other OEMs to resort to other technologies when it comes to advanced displays, giving Apple and Samsung a huge edge in product differentiation in a highly competitive market.”