When Apple announced that iPad sales topped the 2 million mark less than 60 days after launch date, one major financial analyst promptly projected sales of 6.2 million for 2010. Yet the analyst acknowledged that sales could be lower than that if Apple keeps suffering from iPad product shortages, a problem which some supply chain experts now pin on both a particular bottleneck in iPad touchscreen manufacturing and generally tight supplies across the electronic components industry.
Apple CEO Steve Jobs proudly delivered news of the latest sames milestone on May 31, just two days after Apple started shipping iPads into international markets, including Canada, Australia, Japan, and six European countries.
After hearing Apple’s news, Gene Munster, a financial analyst with Piper Jaffray, quickly adjusted his 2010 sales estimates upward from 4.3 million to 6.2 million units.
However, in a note to investors, Munster also warned that sales could be hampered by product availability.
“We conducted 25 checks of Apple stores in the UK, Germany, France, Japan, and Australia, and found that supply exists after the first weekend of sales, but availability is very limited,” according to Munster. “In other words, supply at international stores is limited and declining, similar to trends we saw at U.S. stores.”
Back on April 14, Apple had already decided to push back the start of international iPad sales by one month from the originally planned date. Saying that demand for the iPad turned out to be “far higher” than anticipated, Apple rescheduled shipment to international stores from the end of April to the end of May.
At the same time, Apple announced slight delays in shipment — amounting to a few days — to users in the U.S. who had ordered 3G iPads after April 18.
In widely publicized comments appearing in Bloomberg Businessweek on April 20, Andrew Rassweiler, a senior analyst at iSuppli, said that suppliers challenged by the 9.7-inch size of the iPad display might not be able to make usable screens in the quantities that Apple needs.
“We believe that the touchscreen is still one of many areas that could be limiting Apple’s ability to get product out the door, and the technical reasons I laid out [about the touchscreen] are still true,” Rassweiler affirmed in a Q&A with TabletPCReview.com this week.
“Yields were heard to be very low for the touchscreens, which inevitably would create a capacity pinch point for Apple and other iPad-alikes.”
On the other hand, however, ever since the economic downturn began, the entire electronic supply chain has been experiencing tight supply, in areas that include tantalum capacitators, MOSFETs, and other semiconductors, he contended.
“This tight supply situation applies to everyone – even Apple, [which has] a great deal of industry “pull” and should be RELATIVELY immune to these issues,” he noted.
In an iSuppli report published about a week after the Bloomberg article, Rassweiler drilled down into the componentry in the touchscreen and other parts of the iPad. “The display module in the iPad, supplied by LG Display, is the single most expensive component in the product,” he wrote.
“The display employs advanced, wide-viewing-angle LCD technology. The actual technology reportedly is either In-Plane Switching …or Advanced-Fringe Field Switching. LG Display holds the patent for IPS, while Hydis Technology Co. – a subsidiary of Prime View International – holds the patent on the AFFS technology. Japan’s Epson is a potential future supplier.”
Citing remarks by Derek Lidow, iSuppli’s president and CEO, Rassweiler also noted that, unlike conventional computers, the iPad does not have a motherboard. Instead, Apple designed the screen, the touch pad and the battery, focusing last of all on the semiconductors and where to put them.
In an iSuppli report published on April 26, Dale Ford, another iSuppli analyst, pointed to industry speculation that Apple might be considering a purchase of ARM Holdings.
Meanwhile, in the e-mail exchange with TabletPCReview.com this week, Rassweiler refuted the notion that Apple might be looking to gain better control of its own semiconductor supplies through acquisition.
“Apple expressing interest in ARM has nothing to do with continuity of supply. It’s intellectual property, and Apple is big into protecting their IP and differentiating their value through custom-developed components and systems,” he said this week.