Questions of whether Apple can supply enough iPad minis to meet demand continue to linger. After cutting ties with Samsung for its displays, one of the two alternative suppliers reportedly face production problems. All of which makes the executives at Cupertino nervous amid Cyber Monday mania.
Apple reportedly chose LG Display and AU Optronics to replace Samsung. As we reportedly last week, LG Display makes most of the displays for the iPad mini, which is widely viewed as a top pick among Christmas shoppers. However, now comes a report out of Asia that AU Optronics is having problems producing the displays…
“AU Optronics (AUO) continues to suffer from poor yields in the production of panels for the devices”, writes DigiTimes, a hit-and-miss Asian trade publication.
Unnamed industry sources cited in the report downgraded their iPad mini shipment estimates for the end of the year to between six and eight million units, down from ten million. Because of the news site’s hit-or-miss reporting on hardware suppliers, take the comments with a grain of salt.
If correct, this would put a serious dent in other shipment estimates which forecast overwhelming demand. Wells Fargo analyst Maynard Um said last week Apple did not include the iPad mini in its list of Black Friday discounts, a move he described as “unsurprising,” given “robust demand” and “strong store traffic”.
Apple could sell well over twenty million iPad tablets during the December quarter, he said, adding many of the iPads sold could be iPad minis. Earlier this month, the analyst told investors “roughly half” of the iPads sold will be minis, prompting him to predict “demand continuing to outstrip supply”.
Can LG take up the slack while AU Optronics gets its act together?
LG was responsible for 70 percent of iPad displays, DigiTimes reported in September. But as Christian noted, LG was producing 700,000 iPad displays – far lower than Samsung’s 2.5 million units a month during the first part of 2012.
In these recurring reports of supply issues we see why Apple remained frenemies with Samsung for so long: the South Korean company has enormous manufacturing capacity. While the second half of a year is never a good time to switch horses in mid-stream, one gangbuster product (iPhone 5) after another (iPad mini) is doubly not the time to totally reject Samsung.
However, there couldn’t be a better CEO to head Apple during such a time of troublesome supply. Cook knows supply like UPS knows logistics. Survive the all-important holiday period and then use the early-2013 lull to iron out the kinks in Apple’s supply – currently Cupertino’s weakest link.
Make sense?