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iPhone 5 shortage reportedly a result of Apple's in-cell displays

post #1 of 27
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Apple's adoption of in-cell touchscreen panels for the iPhone 5 is the primary reason supplies of the new smartphone are constrained, according to a new report.

Analyst Ben A. Reitzes with Barlcays said in an note to investors that constraints on in-cell touch displays have been the "key issue" with iPhone 5 shipments. He said that iPhone 5 display supply is estimated to be just 10 million screens for the current, September quarter, while a "significant ramp" is expected to begin in the next, December quarter.

"We still believe Apple is facing significant production constraints due to a move toward in-cell display technology, which pushes a significant amount of units into the December and March quarters ??a factor which limited sales this past weekend according to our checks," Reitzes wrote.

When production of in-cell displays does pick up in the fourth quarter, Reitzes believes Apple will sell more than 45 million iPhones, resulting in 22 percent year over year growth.

The in-cell touch panels used in the iPhone 5 are believed to be manufactured by LG Display Co. and Japan Display Inc. Bloomberg reached out to those two companies, as well as Apple, but all of them declined to comment.

In-cell technology


Apple announced on Monday that sales of the iPhone 5 exceeded 5 million in its first three days of availability. That represented a new record for the company, but also came in below Wall Street expectations.

In a statement, Apple Chief Executive Tim Cook acknowledged that demand for the iPhone 5 is outstripping supply, and that his company is working to catch up with demand. Apple's sales figures also do not take into consideration orders that are en route to customers, as Apple must deliver an iPhone before it can be counted as a sale.

The new iPhone 5 is thinner and lighter than its predecessor thanks in part to the in-cell touch display that Apple has adopted. Previous versions of the iPhone relied on glass-on-glass solutions that were thicker and heavier.
post #2 of 27
Why haven't we heard any rumors of Apple deliberately constraining supply to artificially create the appearance of high demand?

Come on people, there has to be SOMEBODY out there who has absolutely no idea how complex it is to manage a global supply chain with dozens of intricate parts all while trying (and ultimately failing) to keep it all a secret until day of announce.

Oh yeah, and what happened to those folks who were convinced the iPhone5 would have curved sides like the iPod Touch? In fact, from the pics, it looks like the new iPod Touch has less curve overall that the previous iPod Touch, although perhaps still too much to allow it to stand up on an edge unaided.
post #3 of 27

Conscript more iSlaves into the factories to increase supply.

 

 

New troll talking point. See screaming headline article at C|net. Apple is the root of all evil in this world. If only Apple could be destroyed and wiped out all will be well in the universe. Peace and prosperity will reign. Unicorns will be safe.

post #4 of 27
Quote:
Originally Posted by lilgto64 View Post

Why haven't we heard any rumors of Apple deliberately constraining supply to artificially create the appearance of high demand?

 

We already have, and it has a name. It's called sell-out-gate.

 

http://www.macworld.com/article/2010287/macalope-sell-out-gate.html

post #5 of 27
Quote:
Originally Posted by lilgto64 View Post

Why haven't we heard any rumors of Apple deliberately constraining supply to artificially create the appearance of high demand?

I called it weeks ago. It was obvious that Apple would not possibly be able to make enough to meet demand and equally obvious that the trolls would accuse them of artificially constraining supply - even though the demand is truly unprecedented.
Quote:
Originally Posted by lilgto64 View Post

Come on people, there has to be SOMEBODY out there who has absolutely no idea how complex it is to manage a global supply chain with dozens of intricate parts all while trying (and ultimately failing) to keep it all a secret until day of announce..

That's not the hard part. The hard part is trying to figure out how many to have available on launch day. If they had too many, the stock would really have cratered ("Apple can't sell iPhones"). In addition, doing all of this while ramping up new technologies from new suppliers is doubly difficult.
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post #6 of 27
Quote:
Originally Posted by jragosta View Post


I called it weeks ago. It was obvious that Apple would not possibly be able to make enough to meet demand and equally obvious that the trolls would accuse them of artificially constraining supply - even though the demand is truly unprecedented.
That's not the hard part. The hard part is trying to figure out how many to have available on launch day. If they had too many, the stock would really have cratered ("Apple can't sell iPhones"). In addition, doing all of this while ramping up new technologies from new suppliers is doubly difficult.

IMO it's difficult to know how much product inventory there really is. Compared to previous product introductions Apple has a very aggressive and early roll-out to other markets, 22 more countries on the 28th. If Apple weren't actively building inventory for other launches beginning within days I'd guess there would have been more than enough to satisfy the current demand. But just as with you, it's simply my personal guess.

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post #7 of 27

It doesn't seem too difficult to get an iPhone 5 in the UK. Carriers still have stock and I know plenty of people who've had success through Apple's reservation service. 

post #8 of 27
Quote:
Originally Posted by Gatorguy View Post

IMO it's difficult to know how much product inventory there really is. Compared to previous product introductions Apple has a very aggressive and early roll-out to other markets, 22 more countries on the 28th. If Apple weren't actively building inventory for other launches beginning within days I'd guess there would have been more than enough to satisfy the current demand. But just as with you, it's simply my personal guess.

The difference is that your personal guess is nothing more than a guess. OTOH, I have managed product launches.

The demand was going to be immense. On top of that, every day they delayed increased demand further. If they delayed too long, sales would be lost. Balancing those issues is not a trivial task - but any reasonable balance would involve launching before there were enough units to meet initial demand.
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post #9 of 27
Quote:
Originally Posted by jragosta View Post


The difference is that your personal guess is nothing more than a guess. OTOH, I have managed product launches.

You've managed Apple launches before? I had no idea!  Well then you obviously know more about how Apple manages and plans for product releases than any of us in all likelihood.

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post #10 of 27
Quote:
Originally Posted by Gatorguy View Post

You've managed Apple launches before? I had no idea!  Well then you obviously know more about how Apple manages and plans for product releases than any of us in all likelihood.

As usual, you make up lies to hide the fact that you don't have any rational arguments.

I never said that I had managed Apple product launches before. I never even implied it.
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post #11 of 27
I don't understand Apples drive towards anorexic products. I'd happily trade a few mm in thickness for a more powerful battery .

how thin can you get. I wonder if playing card thickness would satisfy them.

Elmo

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post #12 of 27
So maybe they ain't selling quite as expected. Orders with Samsung are supposedly down for a quite different reason.
post #13 of 27
And there is also that problem with black.
post #14 of 27

Reportedly, according to Jefferies & Co, this problem has now been alleviated by the addition of Sony as a supplier for screens.

Details are minimal (sketchy?)

post #15 of 27
Quote:
Originally Posted by jragosta View Post


As usual, you make up lies to hide the fact that you don't have any rational arguments.
I never said that I had managed Apple product launches before. I never even implied it.

Then even if you were involved in some unrelated small product launch at some point in your life you don't have any idea of what would be an appropriate inventory level for a massive iPhone 5 launch, or what amount of existing current inventory they've committed and set aside for the Sept 28th overseas launch. You don't have the foggiest notion if there's 10 million or 2 million units filling foreign channels, or even what inventory was originally planned for the currently available markets compared to actual inventory levels. In other words your guess is as good as mine. :)

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post #16 of 27
First off the analyst has no idea, unless he has an inside track with Apple or a contractor. Second this is Apples biggest launch in history with shipments still going strong. If there was a huge problem shipment would have tanked by now furthermore Apple would not have launched in as many countries as it did.
post #17 of 27
There is two reasons for these 'shortages' and they have been the same reason for all device launches

1. Even at full capacity the factories can only assemble so much

2. Apple doesn't stockpile product for weeks beore a launch. This is due to security risks and battery drain issues. They don't want to risk millions of units being stolen when the warehouse locations leaks, some yahoo stealing a couple of boxes for Gizmodo, or millions of doa units due to trickle drain while they are on some shelf for months.

These analysts are so busy looking for some dire reason they forget that it is this simple. And they forget that in the end folks will wait. They don't see 4-5 weeks on the website and say F it, I'm getting a Samsung etc

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post #18 of 27
Quote:
Originally Posted by Gatorguy View Post

Then even if you were involved in some unrelated small product launch at some point in your life you don't have any idea of what would be an appropriate inventory level for a massive iPhone 5 launch, or what amount of existing current inventory they've committed and set aside for the Sept 28th overseas launch. You don't have the foggiest notion if there's 10 million or 2 million units filling foreign channels, or even what inventory was originally planned for the currently available markets compared to actual inventory levels. In other words your guess is as good as mine. 1smile.gif

We're back to where we started. You've never done a product launch. So you're simply pulling things out of your rear.

I've done product launches, albeit not as large as Apple's, of course. That means I have some experience in inventory planning, timing of product launch, debottlenecking of facilities, learning curves, and so on. While I don't have experience at Apple's scale, I have infinitely more experience than you - and this gives me the ability to at least recognize the issues.
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post #19 of 27
Maybe there are two ways to view the "shortage" in this instance:

One way to view it is that the in-cell display manufacturing was "inadequate" and so that single part is now constraining supply. Or...

NO part of the supply chain was actually "inadequate". Rather, sales for the launch weekend were so over the top HUGE that some part of the supply chain was bound to fall short.

Would Apple have had another few million handsets on hand to sell if they HADN'T moved to the new in-cell displays? I'm not sure it would have made that much difference. This was a FIVE MILLION unit sales weekend. It added ANOTHER million sold ( 25%!) to the 4S launch number, which itself was considered a record-smashing weekend.

I think the supply chain gets kudos for making a five million unit launch happen at all. Has there ever been a 'consumer electronics' device that has sold 5 million units in a single weekend before? Ever? In the history of humanity?

It's precedent-setting sales, backed by precedent setting supply. That's all I'm saying.

OK, all that said. So, it's that new damned display technology that's making us wait, is it?? Well, it had better be worth it!!! Or Apple is DOOMED for sure!! 1biggrin.gif
post #20 of 27

Mine just arrived a few minutes ago by UPS. Originally the status was Oct 5, then they changed it to Sept 27 and now it showed up two days early. I don't even have time to open it though since I'm scheduled for back to back meetings all day. smoking.gif

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post #21 of 27
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Originally Posted by mstone View Post

Mine just arrived a few minutes ago by UPS. Originally the status was Oct 5, then they changed it to Sept 27 and now it showed up two days early. I don't even have time to open it though since I'm scheduled for back to back meetings all day. smoking.gif

Do you find meetings as much of a waste of time as I do?

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post #22 of 27
i noticed the touchscreen is less sensitive and misses my taps more than I would find it to be acceptable. I would think that being thinner, it would be as sensitive as the older one but it doesn't seem to be the case.
post #23 of 27
Quote:
Originally Posted by netrox View Post

i noticed the touchscreen is less sensitive and misses my taps more than I would find it to be acceptable. I would think that being thinner, it would be as sensitive as the older one but it doesn't seem to be the case.

I haven't noticed this at all with native apps. The only times this has happened with me is with non-native "letterboxed" apps, and mostly at the bottom-left corner of those apps. From my experience this tells me it's a SW issue and has nothing to do with the in-cell touch matrix.

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post #24 of 27
Well said.
post #25 of 27
Quote:
Originally Posted by SolipsismX View Post

Quote:
Originally Posted by mstone View Post

Mine just arrived a few minutes ago by UPS. Originally the status was Oct 5, then they changed it to Sept 27 and now it showed up two days early. I don't even have time to open it though since I'm scheduled for back to back meetings all day. smoking.gif

Do you find meetings as much of a waste of time as I do?

Well, sometimes, but when you have international contracts being negotiated you really need to show up.

 

I now have the iPhone 5 running and the old iPhone is inactive until I get a chance to go down to AT&T to unlock it..


Edited by mstone - 9/25/12 at 10:12pm

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post #26 of 27
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Originally Posted by mstone View Post

...the old iPhone is inactive until I get a chance to go down to AT&T to unlock it..

I should get mine unlocked even though I only plan to use it for iOS dev testing.

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post #27 of 27
Apple hype makes things difficult for manufacturers. Apple set the specifications to strategically include Sharp as a manufacturer. Being debt laden and needing cash they then had to deny they were to blame for lower sales than the wide launch signalled.
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