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Apple controlling 60% of available touch panel capacity, analyst says

post #1 of 24
Thread Starter 
Apple has exerted strong control over the touch panel supply chain to prevent shipping delays of the iPad 2, booking as much as 60 percent of the total available capacity, says one analyst.

ThinkEquity analyst Rajesh Ghai issued a note to clients Thursday claiming that it is unlikely that Apple will face component shortages for the second-generation iPad, Barrons reports.

"Apple has already booked approximately 60% of the total available touch panel capacity. While some reports have stated that Apple will be facing component shortages for the iPad resulting from the Japanese earthquake, Hon Hai, Apples primary manufacturing source has stated that it does not expect any component shortages, and alternate suppliers have been lined up."

Ghai's report aligns with a similar note from Ticonderoga Securities analyst Brian White. According to White, Apple has been "aggressively attacking" the component situation in Japan by offering upfront cash payments, in a move that could block competitors from access to critical components.

Another report also alleged on Thursday that Apple had "booked up most of the available capacity" of touch panels, potentially resulting in a one month delay for Research in Motion's BlackBerry PlayBook.

However, Ghai cautioned that, even after having obtained sufficient components, Apple will likely report a "steady though unspectacular Q2" later this month.

Ghai maintains a Buy rating on Apple, while estimating $22.94 billion in revenue for the March quarter. According to the report, consensus estimates have come in at $23.2 billion in revenue.

The analyst expects a strong showing from the launches of the iPad 2 and the Verizon iPhone 4, with some offset from decreased sales in Japan and higher component costs. Last month, it was suggested that Apple had agreed to touch panel price increases as a result of supply disruption stemming from the earthquake and tsunami disaster that struck Japan on March 11.

Given the continued backlog of demand for the iPad 2 coupled with plans to launch the device in even more countries in the near future, Apple executives have made securing sufficient supplies of touch displays a top priority. Several analysts have claimed that production difficulties and yield issues with the iPad display have been the major constraining factor.

Regarding rumors of potential delays of the next-generation iPhone 5, Ghai sees an upside, noting that the launch of a more feature-rich phone in the seasonally stronger second half could prove to be a boon for Apple in the long run. Though a delay would "put a lid" on Apple's Q3 forecast in the short-term, Apple could potentially compensate with significant hardware upgrades, such as LTE technology and Near Field Communication, that are worth the wait, said Ghai.
post #2 of 24
"steady though unspectacular Q2"

in other words, apples tablet market share will not grow percentage wise. It will remain at 92% and unit growth will be 80% year over year (just like iphone grow was... therefore 'unspectacular';-)
post #3 of 24
great, that means 40% will go to crap like the xoom or galaxy tab. meanwhile people are still unable to get their hands on an iPad.
post #4 of 24
Business finesse. Good business planning. Apple is always planning ahead.
post #5 of 24
Quote:
Originally Posted by OllieWallieWhiskers View Post

great, that means 40% will go to crap like the xoom or galaxy tab. meanwhile people are still unable to get their hands on an iPad.

which of course won't sell so they will discounted down to about $200 to clear out. Then we'll hear from market analysts who will tell us apple's market share is shrinking as android devices accounted for 40% of tablet sales.
post #6 of 24
Quote:
Originally Posted by OllieWallieWhiskers View Post

great, that means 40% will go to crap like the xoom or galaxy tab. meanwhile people are still unable to get their hands on an iPad.


Yeah, but that 40% is all 7" and smaller panels that Apple coudn't use anyway :-)
post #7 of 24
There's nothing like free market capitalism at work.

I'm sure there are plenty of factory second and obsolete resistive touchscreens available for competitors.

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post #8 of 24
So now they're a monopoly, therefore evil, omg let's get our village torches and pitchforks and burn the whole thing down.

"Apple should pull the plug on the iPhone."

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"Apple should pull the plug on the iPhone."

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post #9 of 24
Quote:
Originally Posted by OllieWallieWhiskers View Post

great, that means 40% will go to crap like the xoom or galaxy tab. meanwhile people are still unable to get their hands on an iPad.

No. It means 40% is available for purchase, but name one other device with such a demand for 9.7" panels, so most of it will still be available to Apple when it runs out.
post #10 of 24
This story is pure speculation. Apple has not told anyone about its suppliers, its upfront payments for products or any other info. These analysts are just assuming that this is whats happening.
post #11 of 24
Quote:
Originally Posted by nkalu View Post

Business finesse. Good business planning. Apple is always planning ahead.

Yes, but this is, sadly enough, the sort of thing that likely draws DoJ or EU antitrust scrutiny.

I am not suggesting it makes any sense, just pointing out the possibility, that's all.
post #12 of 24
Quote:
Originally Posted by anantksundaram View Post

Yes, but this is, sadly enough, the sort of thing that likely draws DoJ or EU antitrust scrutiny.

I am not suggesting it makes any sense, just pointing out the possibility, that's all.

So tell me what powers do the DoJ and EU antitrust have over Asian parts suppliers?

I know that Americans and Europeans like to think they can control everything, but it's a bit outside their jurisdiction to march into a foreign country and tell their industries who they should or should not sell to.

The

End.
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post #13 of 24
Quote:
Originally Posted by anantksundaram View Post

Yes, but this is, sadly enough, the sort of thing that likely draws DoJ or EU antitrust scrutiny.

I am not suggesting it makes any sense, just pointing out the possibility, that's all.

I guess they can scrutinize all they like, if that is even within their purview. They will find that Apple has saved its money and is buying parts it needs. So what if it needs a lot?

I highly doubt Apple would ever threaten a supplier, "don't sell to RIM or you'll never get our business again." Rather, Apple is simply saying, "we'll take all you have, and all you can make, and here's the cash."

It's when the means of distribution are monopolized that abuses tend to occur, if you can even have a monopoly on the "receiving" or buying end. If others are dependent upon you to do their business, then you better watch out -- as in MS withholding the OEM licenses to computer manufacturers if they also used Linux.

If Apple bought all the factories and decided who got what, then there might be an issue. Suppliers don't have to sell to Apple right now, they just like the assured cash for real orders.

What would be anti-competitive in this sort of case might be if the Taiwanese govt stepped in and told a Taiwanese component supplier they couldn't sell to Apple until they had satisfied Taiwanese computer companies first. Then I would expect the US DOJ to step in for Apple and place tariffs on those computers coming into the US.
post #14 of 24
It's another day at the office for Apple. Apple know they can ship and sell xx units and to do so they require xx number of components. So, it's simple math, put the billions of cash up front to secure inventory.

This is a difficult proposition for Apples competitors as they have no way of knowing how well their product will sell over a month let alone 12 months. Due to this they are unlikely to part with billions of dollars to secure components.
post #15 of 24
Quote:
Originally Posted by irnchriz View Post

It's another day at the office for Apple. Apple know they can ship and sell xx units and to do so they require xx number of components. So, it's simple math, put the billions of cash up front to secure inventory.

This is a difficult proposition for Apples competitors as they have no way of knowing how well their product will sell over a month let alone 12 months. Due to this they are unlikely to part with billions of dollars to secure components.

So true. Apple buys a lot of parts... because they need to make a lot of products... because people buy those products. It's very simple.

An earlier article was saying how Android will become 49% of the smartphone market. That's great... but Android doesn't make phones. The OEMs do.

It's up to Motorola, HTC, Samsung and LG to order parts. Are their orders not large enough to make suppliers jump? That's not Apple's fault.

Is it bad that Apple 1) needs a lot of parts and 2) has truckloads of cash to buy those parts?

Nope... it's just business as usual. Last quarter, Apple was selling 180,000 iPhones every day.

Apple's suppliers are thrilled when they come a-knockin'
post #16 of 24
Quote:
Originally Posted by TheOtherGeoff View Post

"steady though unspectacular Q2"

in other words, apples tablet market share will not grow percentage wise. It will remain at 92% and unit growth will be 80% year over year (just like iphone grow was... therefore 'unspectacular';-)

Well, with 92% market share there is not much room left to grow (concerning market share).
post #17 of 24
Quote:
Originally Posted by TheOtherGeoff View Post

"steady though unspectacular Q2"

in other words, apples tablet market share will not grow percentage wise. It will remain at 92% and unit growth will be 80% year over year (just like iphone grow was... therefore 'unspectacular';-)

Actually it's a good thing they underestimate so when the report comes out they can say: Apple blew past Wall St expectations today.... yadi yada
post #18 of 24
Quote:
Originally Posted by anantksundaram View Post

Yes, but this is, sadly enough, the sort of thing that likely draws DoJ or EU antitrust scrutiny.

I am not suggesting it makes any sense, just pointing out the possibility, that's all.

What draws scrutiny is for competitors to buy up large portions of supply and take a loss in an attempt to stall Apple or other competitors from expanding their sales.

Apple will burn through this supply and everyone knows it.
post #19 of 24
Quote:
Originally Posted by OllieWallieWhiskers View Post

great, that means 40% will go to crap like the xoom or galaxy tab. meanwhile people are still unable to get their hands on an iPad.

My thoughts exactly! What a waste of perfectly good screens.
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post #20 of 24
Quote:
Originally Posted by Rabbit_Coach View Post

Well, with 92% market share there is not much room left to grow (concerning market share).

That's the problem with statistics

What is the definition of the 'market' in the statement they have 92%? If Apple could attract a totally new set of buyers, their 'market' could double or treble. I assume the market being discussed is based on the statistics of the last thirty years of traditional computing, who the hell knows what the market it for the iPad is yet?

Just two possible new market extensions ... How about old folks who never thought they'd ever get a computer as it was just to darn complex. Or sub 6 year olds who now seem to be using them as easily as Play-Doh.
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post #21 of 24
Quote:
Originally Posted by BUSHMAN4 View Post

This story is pure speculation. Apple has not told anyone about its suppliers, its upfront payments for products or any other info. These analysts are just assuming that this is whats happening.

Pretty much.

The real truth is probably that Apple was smart enough to over order what they calculated they would need right away knowing that their best guess is always too few. AND did so well in advance. So now, especially after the Japan crisis, the companies are working to meet their contract with Apple as close to deadlines as possible (with Apple generously switching to prepay rather than on delivery so the companies can operate with as little red in the budget as possible) and companies ordering parts now are being told they basically have to wait because the companies need to fulfill existing orders but perhaps have fewer lines going due to building damage, electricity and water restraints, damaged roads etc.

No 'evil' by Apple involved. Evil by a very pissy Mother Nature sure, but not Apple

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post #22 of 24
Quote:
Originally Posted by Suddenly Newton View Post

So now they're a monopoly, therefore evil, omg let's get our village torches and pitchforks and burn the whole thing down.

A wee tacky but my boss just goes "well Jobs weighs about the same as a duck"

Quote:
Originally Posted by Rabbit_Coach View Post

Well, with 92% market share there is not much room left to grow (concerning market share).

Just the other 8%

Quote:
Originally Posted by digitalclips View Post

If Apple could attract a totally new set of buyers, their 'market' could double or treble. I assume the market being discussed is based on the statistics of the last thirty years of traditional computing, who the hell knows what the market it for the iPad is yet?

Sounds like you are confusing market and audience. When Wall Street talks about 'market' they mean the category a device falls in. THe ipad would be something like 'touch screen based mobile personal computing devices'. Even if the ipads audience quadruples, their market 'share' could stay the same or even drop depending on how that audience growth affects the base numbers for sales in the market. And how everyone else is doing. 4x the number of ipad buyers means less if there's 50x more Xoom etc buyers. And just what devices they count in the market. If they include phones like the Tab, iphone etc then the ipad's share is much lower just for that.

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post #23 of 24
Wife and I had the v1 iPads. Now we are stoked about our new iPads that arrived the other day. I synced mine and got it all set up and then noticed that the text is not as crisp. It actually seems to go in and out of fuzziness right before my eyes. And there's a definite angle that it looks best.

I checked out apps like Wall Street Journal, NYT, Pages text, and some games like Words with Friends. Fuzzier than v1 iPad.

So I'm syncing my wife's iPad to my account and running the same checks against our old iPads. I hope it's an anomaly and not something that is unique to these panels.

Does anyone know if they are the same panels? Anyone else seeing the blurriness?
post #24 of 24
Quote:
Originally Posted by nkalu View Post

Business finesse. Good business planning. Apple is always planning ahead.

I beg to differ. They are getting desperate. Apple is feeling the pinch of their competitors encroaching on their market share. This is just another method of cock blocking.

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"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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