Report: Apple using MacBook supplier AU Optronics and LG Display for iPad mini display

As we get closer to the expected October launch of Apple’s “iPad mini,” details are emerging about how the Cupertino, Calif. company is reshaping its supplier base in the face of growing demand for handheld devices. AU Optronics, which made MacBook displays, is now building parts for the smaller iPad, Bloomberg reports Friday.

LG Display is also among the suppliers for the smaller tablet, according to Bloomberg.

The new iPad will measure 7.85 inches, more than two inches smaller than the current 9.7-inch Apple tablet. Unlike the latest iPad, which included the Retina display, the upcoming tablet will forego the high-end feature, perhaps another sign Apple is girding for a fight with cheaper products from Google and Amazon.

In related news, Apple apparently has passed over Sharp as an initial supplier of displays for the new iPad. As we reported earlier today, the Japanese company is having trouble producing the expensive new iPhone display. However, Sharp “may make panels for the device in the future.” Note the use of the word “may.”

AUO is Taiwan’s second-largest maker of flat panel displays. Traditionally, a supplier of MacBook displays, the company has watched iPad sales overshadow the venerable laptop. Indeed, Apple sells five tablets for every one MacBook, according to Bloomberg.

Apple currently is the leader in tablet sales, controlling 70 percent of the sector, researchers at IHS iSuppli say. However, that lead could be eroded by the entry of Google’s Android-based $199 Nexus 7, Microsoft’s Surface and Amazon’s newest Kindle Fire, expected to be announced next week.

Amazon attempted to set the stage Thursday, announcing Kindle Fire sales were 22 percent of the US tablet market. Percentages are nice when you also have hard sales figures, which Amazon CEO Jeff Bezos treats like state secrets. The result was a raft of news stories questioning just where the online retailer stands in the tablet arena.

There are no questions where Apple’s iPad stands. During the second quarter of 2012, the company shipped 17 million tablets. That’s enough to make the teeth of CEO’s ache with envy. Google, Microsoft and Amazon have a lot of catching-up to do.

What do you think? Will Apple dominate the 7-inch tablet market, just as its done with its full-size iPad?