iPad mini (Minimally Minimal 002, white, desk, Magic Mouse)

Two days ago, sources reported AU Optronics, which alongside LG Display supplies Apple with 1,024-by-768 display panels for the iPad mini, recently began work on new screens for the next-generation iPad mini. And with yields allegedly now meeting Apple’s exacting standards, Taiwan media Friday claimed AU Optronics started mass producing 2,048-by-1,536 324ppi Retina screens for the device, which is said to use the dual-core A5X chip and quad-core graphics to drive the display…

According to a report by My Drivers, a Chinese website that covers IT industry news (translated to English by BrightWire), AU Optronics has now started mass production of second-generation iPad mini panels. Yesterday’s images of the purported iPad mini 2 rear shell, seen below, also indicate manufacturing may have recently commenced.

DigiTimes reported this morning that panel shipments for the iPad mini reached over five million units during January 2013, with AU Optronics responsible for 1.5 million and LG Display for 3.6 million units.

The My Drives report also cites inside sources who claim production cost for iPad mini 2 has topped $200 per unit versus an IHS-estimated $188 per iPad mini unit.

The 1,204-by-768 iPad mini panel costs an estimated $32 per unit and the same research firm now estimates a Retina upgrade with more LEDs for the backlight module could add up to 30 percent to iPad mini 2 bill of material.

ifixit ipad mini 1
iPad mini teardown via iFixit.

Apple typically updates its gadgets with new technology while keeping prices intact. Rarely does the company increase the price of a product just because it added a new technology. True, Retina MacBook Pros do cost more, but non-Retina ones are still available. Moreover, Apple recently cut prices of Retina notebooks by as much as $300.

http://www.youtube.com/watch?v=jvRaNXmsqcM

Because seven-inch tablets are quite popular, I doubt Apple will simply replace the current iPad mini with a pricier Retina model. Provided Apple gives up some of its margins, a Retina iPad mini 2 should start at the same $329 entry-level price as the current model. Moreover, Apple should recover from the short-term margin hit when Retina panel costs come down, and come down they will as soon as Apple works out kinks in the manufacturing process.

iPad mini 2 rear shell (WeiPhone 002)iPad mini 2 rear shell (WeiPhone 001)

I’m also curious as to what happens to the original iPad mini once iPad mini 2 is out.

Will Apple phase out the iPad mini entirely or discount it as the company typically does with older iPhones when a new model gets introduced?

What say you?