Supply cuts a result of Apple’s adoption of IGZO screens for upcoming iDevices?

Sharp IGZO chart

The reduction in orders of iPhone 5 displays and other components isn’t a sign of weak demand as sober analysts paint demand as robust. Nevertheless, the rumor has opened door for more speculation that the Cupertino, California company is winding down production of the iPhone 5 ahead of the iPhone 5S release in June or July.

Be that as it may, it would be very atypical of Apple to pull the current-generation model from shelves after just six months. Even as the company switches to a bi-annual refresh cycle, it will still want to continue offering the iPhone 5 at a reduced price after the next-gen model becomes available. According to a new report, these supply cuts are actually the result of Apple considering IGZO displays for upcoming iOS devices…

John Paczkowsk, writing for the AllThingsD blog, a Wall Street Journal property:

Another possible explanation: The reduction in orders is the result of a coming switch in display technology. Sources close to Apple tell AllThingsD that the company has been evaluating IGZO displays for use in its iOS devices, though they declined to say what the results of that evaluation have been.

Of course, we’ve known for a while that Apple is hoping to use Sharp’s IGZO display technology in its gadgets as IGZO panels require only a fraction of energy compared to traditional LCD screens.

Sharp, in part thanks to a $120 million investment from chip maker Qualcomm, is the first major vendor to successfully mass-produce these new panels. The semiconductor material combining indium, gallium, zinc and oxide (hence the IGZO name) replaces the standard amorphous silicon material used for the active layer in thin-film transistors.

Topeka Capital Markets’ Brian White was in attendance for Sharp’s news conference at CES last week. The analyst believes Apple is a “prime candidate” to adopt IGZO across iOS devices due to the twice the resolution of conventional LCD screens, with up to 90 percent power savings.

He is adamant that Apple “increasingly requires new innovative display technologies to compete with Samsung”, whose high-end devices feature crisp AMOLED panels.

What IGZO also does for you is it provides richer and livelier colors with deeper blacks and overall sharper images. And even after turning off the power of a device, IGZO allows the image to continue to be displayed on the screen. That IGZO panels are just as thin as in-cell panels found on the iPhone 5 doesn’t hurt either.

Apple hasn’t responded to the order cuts rumor because, per SEC rules, with the impending earnings call Apple is now in its ‘quiet period’. The Cupertino firm will reports its fiscal 2013 first-quarter earnings next Wednesday, January 23.

On supply cuts signaling weak iPhone 5 demand: Dialog Semiconductor last week said it expects a significant increase in December sales due to “a stronger than anticipated end of year, underpinned by a strong late surge in demand for smartphone and tablet products”.

Their largest customer is Apple, which accounts for 60 percent of Dialog’s total revenue.

Is it any surprise that now a bunch of analysts are saying that iPhone 5 demand remains strong?

Feel free to draw your own conclusions.