Supply cuts? Think a major technology shift ahead of iPhone 6

By , Jan 18, 2013

iPhone 5 mockup (Martin uit Utrecht 001)

There has never been so much hoopla surrounding Apple’s supply chain like recent talk of a severe cut back in orders of screens for the iPhone 5, and now iPads as well. The negative sentiment in those unverified reports has already sent AAPL below $500 ahead of the impending earnings call.

But one analyst isn’t worried at all. In his mind, the cutbacks are the result of an upcoming “evolutionary technology update” for the next iPhone rather than a sign of a lack of demand for the new Apple handset…

According to MacWorld UK, Global Equities Research’s Trip Chowdhry says a drop off in Apple screen orders supplied by Sharp, LG Display and Samsung Display is an indication of the Cupertino firm starting to source mobile screens from a new supplier, in preparation for the launch of the next iPhone:

The data is accurate, cancellations are happening – but what is the underlying reason? There is a technology shift happening at Apple.

Chowdhry then adds that Apple is about to launch an “evolutionary leap in phones”, likely the iPhone 5S which is expected in a few months.

Also this:

According to Chowdry, Apple has been ordering glass that is also able to be cut into large panels, which could indicate that the company is working on its widely speculated Apple television set.

But what kind of a technology shift is this analyst talking about?

If China Times is right, the next iPhone will have a new Touch-On-Display technology from Foxconn subsidiary Chimei Innolux. Touch-On-Display doesn’t make the display assembly any thicker, but instead fixes the slower response speed of  the iPhone 5′s in-cell panel.

If you’ve been following supply chain reports, you probably are aware that Apple is rumored to be adopting a new display technology for upcoming products. Corroborating these market whispers, sources told AllThingsD that Apple has been evaluating IGZO displays for use in iOS devices.

Chowdhry acknowledges as much himself:

He expects Apple to introduce IGZO screens into its next iPhone, which will be lighter, more energy-efficient, and easier to cut for different sized models.

And this report by Taiwan-based China Times newspaper says Apple for the second-generation iPad mini is already evaluating Retina panels from Foxconn subsidiary Shenzhen Century Science & Technology, based on the new One Glass Solution assembly process.

If you ask me, deploying a new display tech and assembly process across the forthcoming iPhones and iPads is a pretty good reason to cut orders for the current display technology that’s now basically being phased out.

iPad mini (landscape, in hand, display)

Although a seasonal dip is normal around the holidays and especially going into the sales slump known as post-holiday Q1, the cutbacks Apple’s suppliers are now seeing are seemingly impossible to ignore.

On the other hand, lots of doubt surrounds the figures cited in flawed Nikkei and WSJ reports. Seriously, 65 million iPhone 5 units in the quarter right after the holidays? Be that as it may, it’s head-scratching Apple would suddenly see such a drastically weakening demand for both the iPhone and iPad, the company’s two most popular product lines.

J.P. Morgan analyst Mark Moskowitz  deems the cutbacks for iPhone 5 screens the result of “supply chain adjustments” that are “explainable but not alarming”. Other analysts are also telling spooked investors that the cutbacks may not mean lower demand for Apple gizmos.

If you ask me, that’s exactly what’s at play here: a technological shift ahead of a new product introduction. That would by no means file as a small feat. Adopting the cutting-edge IGZO screen tech, for example, across future iOS devices would admittedly file as a marvel of engineering.

These cutbacks happened numerous times in the past, but nobody paid much attention. With Tim Cook at Apple’s helm and the past two quarters missing expectations, some folks are reading too much into these reports.

As Apple is now scrutinized like crazy, inevitably some watchers are fooled into misinterpreting supply chain data. And I have no doubt in my mind that somewhere in these reports there is a hidden agenda (can you say “stock manipulation”?).

Are you concerned about the cutbacks?

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  • jose castro

    why????? people are getting hyped up for no apparent reason. like they did with the iPhone 5…. im sure its going to be the same phone just taller or wider ect.yey woopie they change the screen panel yet again… .. i seriously hope they have big changes in ios7..

    (don’t get me wrong i love my iPhone 5 and cant wait to have it jailbroken) ;)

    • Stick

      Despite the selling numbers from the 4S, to me, and to many people, was a let down. Apple knew the fans weren’t blown away and they knew we were all expecting what is now the 5 back when the 4S came out. I don’t think Apple will do that again. They will definitely do something big, whether it’d be to the phone, or the OS.

      • Mohammed Sahib

        Wishful thinking..

  • jvi1000

    Excellent article! And yes, the whole cutbacks narrative is a fig leaf for stock manipulation. Options expiration is the reason for this massive decline. LEAPS Call writers owed a TON of money before the decline. Now they don’t. How convenient.

  • http://twitter.com/El_Barto_01 El Barto

    Same old same old analyst and blogs trying to spread misinformation, cause alarm, drop the stock and gain from the losers selling…too bad the FTC is too chicken to look in to stock manipulation.

    • http://www.facebook.com/Tommyg80 Tommy Gumbs

      I agree. These so called writer are nothing more than “yellow journalist” and they should be held to hire standards from bodies like the FTC. These so called writers should not be writing.

  • macboy74

    Ive said it before ill say it again. Apple will do this year what it did in 2007 and revolutionize the smartphone again.

    • Kurt

      this is the one of the comments i was talking about. sorry, but all evidence points to the same ol’ same ol’ with the next rendition of the iphone and the ipad 5, which i will be buying. not the iphone obviously, its crap. so crappy, that you can buy it for free here in korea

      • macboy74

        Same ol same ol huh? Lol What like the nexus 1,2,3 and 4. Like the first and second gen nexus 7. Like the Samsung GS 3 and 4. Like the Samsung note 1,2 and 3. You see the trend there. Smh. And btw how do you buy something for free? Lol

  • http://twitter.com/emayteeteej Matt Oliva ツ

    Did everyone forget they are moving away from Samsung for supplies? So quick to judge.

    • Kurt

      “so quick to judge”…hmm, now what about LG, Sharp…?

  • Kurt

    “These cutbacks happened numerous times in the past, but nobody paid much attention.”

    Only similar drop off was before a release of the device. Not many months before hand. you guys are trying to spin this in apples favor and it only works with people who 1)don’t remember the past or 2) fanboys who are wishful thinking. the reason this is such big news now is because they won’t be releasing a new iphone for many more months so its a real signal that the iphone isn’t as popular as it once was. but i’m hopeful that the ipad will be released in march. perhaps the crappy 7th gen iphone will be too

    • macboy74

      And how do know there isn’t a new device coming in the next couple months?

      • Kurt

        so you think in march there will be a 7th gen iphone? or you agree with me? by your name and your typical posts, im assuming you will be too biased to answer truthfully :-/

      • macboy74

        I was talking about iPads first off. Second the name says Macboy not iPhoneboy. I use and own tablets and phones that run iOS and Android. And computers that run windows and OSX. I’m not close minded to one thing like the rest of you people.

      • Kurt

        so you think in march there will be a 7th gen iphone being released?

      • macboy74

        Omg Are you high man? Maybe reread what you just replied to. I type ipad not iPhone. I swear I think people just read the heading on these pos and got straight to the comments.

  • macboy74

    Meanwhile all Android tablets combined sold a total of 4 million tablets and Microsoft sold almost a million surface tablets. Apple sold over 13 million last quarter and are projected to have sold over 9 this quarter. I’m sorry what was this post about again.

  • Joonyaboy

    analysts and rumors suck

  • Liam Mulcahy

    The IGZO video is creepy

  • Nvrhde

    Iphone 6 screen will so sharp and so colourful, your eyes and Brain want be able to process it,

    So you will see only normal screen.