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Apple adds 4 integrated circuit makers to iPad 3 supply chain - report

post #1 of 14
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Apple is said to be vastly expanding its number of integrated circuit suppliers for an anticipated third-generation iPad, adding four companies from Taiwan to keep costs low.

Citing anonymous industry sources, DigiTimes reported Tuesday that Taiwan's Novatek Microelectronics, Richtek Technology, Capella Microsystems and Integrated Memory Logic have entered the iPad 3 supply chain. None of the integrated circuit makers confirmed the reports.

"Apple is now more willing to adopt IC solutions from Taiwan-based IC design houses as it is adjusting the cost structure for iPad tablets in order to compete with an array of tablet PCs to be launched by rivals in the second half of 2011, commented the sources," the report said.

Integrated Memory Logic has reportedly been tapped to supply "gamma Vcom buffer solutions" for Apple's anticipated third-generation iPad. That technology is said to be used in touch panels for smartphones and tablets.

In addition, Novatek will reportedly supply LCD driver integrated circuits, Capella will provide ambient light sensors, and Richtek is said to be building integrated power management integrated circuits.

Rumors of a so-called "iPad 3" launching this year have been an on-again, off-again affair throughout 2011. Claims of a third-generation iPad launching in 2011 cropped up before the iPad 2 was even announced.

Apple seemed to silence those rumors when it declared 2011 the "Year of iPad 2" in March. But months later, rumors again surfaced that Apple is planning a third iPad that will expand the product line rather than replace the current iPad 2.



In recent weeks, iPad 3 talk has picked up, with claims that a so-called "iPad 2 Plus" could launch this year with a high-resolution display. Supporting those claims, both LG and Samsung are said to be working on low temperature polysilicon 2048-by-1536-pixel displays for Apple's next-generation tablet.

Another report, also from DigiTimes claimed that Apple's overseas manufacturing partner Foxconn has been in talks to remain the sole assembler of iPad 3 units in 2011. And photos of a component claimed to be leaked from a new iPad model have even suggested that such a device could be a completely redesigned model.
post #2 of 14
Either Apple is concerned about keeping costs down or it's looking to charge a premium for a deluxe version of the iPad. It's not likely to be both.

I don't think an iPad costing the same as a basic Macbook Air is going to make the grade, at least not at this time. I also think that Apple is under no pressure to fast track a new version of a product that is still dominating the tablet market. The competition is yet to catch up and when the iPad 3 comes along early next year, God help that competition because I suspect Apple will up the ante considerably.
post #3 of 14
Quote:
Originally Posted by Carmissimo View Post

Either Apple is concerned about keeping costs down or it's looking to charge a premium for a deluxe version of the iPad. It's not likely to be both.

Huh? You don't think that Apple seeks to keep costs down on all it's products when it can do so without sacrificing quality? Anyway iPad volumes are already at 50% of iPhone volumes and growing at 150% YoY, so Apple may be diversifying simply to ensure a reliable supply.
post #4 of 14
First I think Apple learned a thing or two when the earth trembled on Japan last year. When you get to be Apples size supplier diversification is very important. The biggest problems with the current iPads have been with the ability to scale production, more suppliers in the mix help here too.
Quote:
Originally Posted by Carmissimo View Post

Either Apple is concerned about keeping costs down or it's looking to charge a premium for a deluxe version of the iPad. It's not likely to be both.

I don't think it is either. Apple has struggled with scaling device production, I suspect that they will address that first. As to keeping the costs down that is always an issue.
Quote:
I don't think an iPad costing the same as a basic Macbook Air is going to make the grade, at least not at this time.

Actually I agree 100% here. In fact I'd go so far as to say they need to lower the price of current hardware some. I could see them re factoring iPad 2 to allow it to be sold at a lower price.

As much as I like my iPad it is a little expensive for what it is. Especially in the context of things like the AIR you mentioned.
Quote:
I also think that Apple is under no pressure to fast track a new version of a product that is still dominating the tablet market.

Here I disagree completely! In the case of Apple they have a history of letting things slide and then wondering where their sales went. Complacency and keeping a hold on the market do not go together.
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The competition is yet to catch up and when the iPad 3 comes along early next year, God help that competition because I suspect Apple will up the ante considerably.

Yes Apple has the potential to push iPad 3 far ahead. However they can do massive damage to the competition by bringing iPad 3 out this fall. This would allow Apple to crush much of the competition before they even leave the gate.

Business is brutal. You really can't kick back and coast, rather you need to be sprinting with one eye in the back of your head keeping an eye on the competition. The otherway to look at this is that the game is currently Apples to screw up and loose.
post #5 of 14
Random bits of information that really don't add up to anything significant.

A new iPhone seems more likely before a new iPad. With the current iPad2 selling so well, I don't see a true iPad3 coming this year.
post #6 of 14
Quote:
Originally Posted by wizard69 View Post

Yes Apple has the potential to push iPad 3 far ahead. However they can do massive damage to the competition by bringing iPad 3 out this fall. This would allow Apple to crush much of the competition before they even leave the gate.

Right, economies of scale are powerful stuff. If Apple is making 90% of the tablets, and the other 10% is being fought over by a dozen other makers then it has a huge advantage in terms of margin and R&D. As demonstrated in the PMP market, that kind of share can be sustained for years so long as Apple doesn't get careless.
post #7 of 14
Quote:
Originally Posted by cloudgazer View Post

[] Anyway iPad volumes are already at 50% of iPhone volumes and growing at 150% YoY, so Apple may be diversifying simply to ensure a reliable supply.

That seems the most likely scenario at this point.

The only reason I could see Apple releasing an iPad 3 with a HiDPI display (and associated components) is to solidify it's iPod-esque dominance and control of the tablet market. But that's only if they are scared, which I don't think they are. Plus, even excluding their iPod segment it would interfere with their iPhone sales.

PS: When did we start hearing about Apple securing component makers for the iPhone mid cycle? Perhaps there is a precedent in which to get a better understanding of their assumed future sales.
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post #8 of 14
Quote:
Originally Posted by solipsism View Post

The only reason I could see Apple releasing an iPad 3 with a HiDPI display (and associated components) is to solidify it's iPod-esque dominance and control of the tablet market. But that's only if they are scared, which I don't think they are. Plus, even excluding their iPod segment it would interfere with their iPhone sales.

Why would it affect iPhone sales? The empty wallet effect? I don't think that's an issue, it would just delay the iPhone sales a bit.

Quote:
PS: When did we start hearing about Apple securing component makers for the iPhone mid cycle? Perhaps there is a precedent in which to get a better understanding of their assumed future sales.

That's a good question, I'm not sure, but I think even if we knew it might not help. As Apple has grown so much in the last few years the level of interest has grown greater and it's harder and harder for them to move in secret. The same sort of thing happened to Berkshire Hathaway.
post #9 of 14
It's not an "iPad 3" it's a "Mac Touch" aimed at the more 'pro' end of the market that requires greater connectivity, such as the music industry for example.
post #10 of 14
Quote:
Originally Posted by cloudgazer View Post

Why would it affect iPhone sales? The empty wallet effect? I don't think that's an issue, it would just delay the iPhone sales a bit.

Yes. It's not an issue of what can reasonable afford, it's a psychological effect of buying too much (cost or quantity) within a personally set time frame.

Let's use a more extreme example and ignore other complications associated with this example: if Apple released the iPhone 5 and iPad 3 on the same day too many would only be buying one new "tech toy", not both. Now, that would help Apple in one area of being able to half their supply in some regards for components, like the display, that are not shared between devices, but it would have other negative effects that make this a very, very unlikely scenario.
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post #11 of 14
Quote:
Originally Posted by monstrosity View Post

It's not an "iPad 3" it's a "Mac Touch" aimed at the more 'pro' end of the market that requires greater connectivity, such as the music industry for example.

I tend to agree. A more powerful, high resolution iPad with more ports, perhaps? Likely to cost as much as a full blown notebook, but be just as useful?
post #12 of 14
Quote:
Originally Posted by solipsism View Post

Yes. It's not an issue of what can reasonable afford, it's a psychological effect of buying too much (cost or quantity) within a personally set time frame.

Let's use a more extreme example and ignore other complications associated with this example: if Apple released the iPhone 5 and iPad 3 on the same day too many would only be buying one new "tech toy", not both. Now, that would help Apple in one area of being able to half their supply in some regards for components, like the display, that are not shared between devices, but it would have other negative effects that make this a very, very unlikely scenario.

I actually think that the slight spreading of demand would be to their advantage, what's the down side? Especially remember that the holiday season will soon be upon us, when vast amounts of iPads will be given as gifts. Any overcapacity in calendar-Q3 will disappear by the end of Q4.
post #13 of 14
Quote:
Originally Posted by cloudgazer View Post

I actually think that the slight spreading of demand would be to their advantage, what's the down side? Especially remember that the holiday season will soon be upon us, when vast amounts of iPads will be given as gifts. Any overcapacity in calendar-Q3 will disappear by the end of Q4.

It all depends on their ability to source components. The downside would be if they can't sell all they can make at full tilt. Look at this way, if the average buyer wants their Apple product to be the new hotness and decides to only buy one of the two luxury tech products released at the same time but also expects them to be released at the same time each year they might decide to skip a year between devices. IOW, they'd only buy the iPhone or iPad each year. But if Apple steps the releases by 6 months they might be able to get more sales which equal more revenue which equal more profit per year.

You also have to consider the other components. Is any of the silicon shared between platforms also constrained? If it's not just the platform-centric components then this perceived benefit of releasing the iPhone 5 and iPad 3 at the same time because pointless.
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post #14 of 14
Quote:
Originally Posted by solipsism View Post

It all depends on their ability to source components. The downside would be if they can't sell all they can make at full tilt.

As I said, I don't think that's an issue for them because any slack in the iPad will get picked up when christmas hits, and anyway most top end phones are subsidized so very few people in the main markets will delay their phone purchase.

Quote:
Look at this way, if the average buyer wants their Apple product to be the new hotness and decides to only buy one of the two luxury tech products released at the same time but also expects them to be released at the same time each year they might decide to skip a year between devices.

I think the insane sales on the iP4 at over 1Yr old kinda show that people will keep buying the product long after it's the new hotness. People's replacement cycle on the phone will be driven by contracts and on the iPad it will be driven by how many family members are pleading for their own device

Quote:
You also have to consider the other components. Is any of the silicon shared between platforms also constrained? If it's not just the platform-centric components then this perceived benefit of releasing the iPhone 5 and iPad 3 at the same time because pointless.

As far as we know the only seriously constrained component they might be sharing is the A5, even that's not certain. At any rate they'd be sharing the same SoC foundries because the A4 and A5 are on the same process, so unless they can launch an A6 device in fall, which seems very unlikely, whatever they're selling in September will be on the same process for the SoC.

The thing that will really limit this is availability of whatever shiny new component the iPad-3 needs - be it HiDPI screen or whatever. I really think if they have them in volume by September or October they'll do it, otherwise they'll hold off till Spring 2012.
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