Sharp Corp., a supplier of 9.7-inch IPS LCD display panels to Apple for its standard-size iPad, has reportedly cut production, as demand for the panel dropped below a bare minimum, in comparison to a rising demand for that of the iPad mini. Production of the panel at Sharp's Kameyama plant in central Japan dropped below a critical level required for Sharp to maintain its profit-margin/feasibility, below which it will be forced to stop production and decline further orders until a newer contract is worked out. Yet, there's a small and unknown volume of panels being shipped out.
The 9.7-inch display panel uses the IPS (in-plane switching) LCD technology, is LED-backlit, and features what Apple refers to as "Retina" resolution (2,048 x 1,536 pixels), which results in a high pixel density. Although Apple, which was contacted in late Friday evening by Reuters didn't have an immediate comment, market analyst Macquarie Research may have found an explanation.
According to Macquarie, shipments of the 9.7-inch iPad will tumble nearly 40 percent by the end of Q1-2013, to 8 million, from 13 million in Q4-2012. Apple's overall tablet shipments will stay relatively unaffected due to strong sales of the iPad mini. In other words, the mini is eating (gouging, rather) into the 9.7-incher's market share. Another firm, Sterne Agee dubbed Sharp's cutbacks as seasonal. "The March quarter is almost always weaker than the December quarter," he said, adding that Apple also consolidates suppliers of certain components during quarters with weaker demand. "The Korean manufacturers are more efficient and typically have lower costs."
Sharp isn't the only supplier of 9.7-inch panels to Apple, which also buys them from Korean companies Samsung and LG. While orders for Samsung are on a steady decline, with Apple's move to minimize dependency on Samsung-made components in its products, the company doesn't note an unusual drop in orders from Cupertino.