With 60% of world's touch panel capacity, Apple squeezes competitors

Posted:
in iPad edited January 2014
Apple has reportedly locked up 60 percent of the world's touch panel capacity, which has led to "tight supply" among competitors hoping to take on the iPad.



According to DigiTimes, Apple is expected to cause an industry-wide component shortage in 2011, which is causing issues among tablet PC makers. The most serious shortage has reportedly occurred with touch panels, as Apple holds the majority of capacity from major suppliers Wintek and TPK.



Major companies Research in Motion, Motorola and Hewlett-Packard are said to be competing for related components with Apple, pushing "second-tier players" out of the market entirely. Specifically, glass capacitive touch panels, like the one found on the iPad, are the most constrained component.



"Sources from iPad distributors pointed out that in 2010, Apple's order forecasts to its OEM partners were all high and the biggest problem on the supply side was not capacity, but low yields of touch panels," the report said. "In 2011, Apple's strategy of taking up most of the capacity should help the company quickly expand its sales, while reducing its competitors' shipment growth."



Apple Chief Operating Officer Tim Cook revealed in January that his company committed $3.9 billion to secret long-term component contracts. The company would not reveal what the money was put toward, citing a competitive disadvantage in doing so, but it has been widely speculated that the money has been put toward LCD screens and touch panels for devices like the iPhone and iPad.



Analyst Katy Huberty of Morgan Stanley said the investment could allow Apple to buy 60 million iPad touch panels, or 136 million touch displays for the iPhone.



Apple's secret investment is similar to 2005, when the company prepaid for NAND flash memory, allowing it to leverage pricing and garner supply for devices like the iPhone, iPad and new MacBook Air. Much like the anticipated control over the touch panel market in 2011, at numerous points in the past Apple caused a shortage of NAND flash, leaving competitors out while products like the iPhone dominated components.
«13

Comments

  • Reply 1 of 58
    apple ][apple ][ Posts: 8,360member
    Smart move by Apple, and they're obviously putting their enormous surplus of built up cash to good use.



    Touch panels are a hot item now, and it's kind of hard for competitors to compete if there aren't enough screens being made to meet the demand and you happen to have first dibs on most of them.



    Maybe that's why many of the competitors are coming out with those awful smaller sized tablets which fit somewhere between a smartphone and a real tablet.



  • Reply 2 of 58
    29922992 Posts: 202member
    good business to produce and sell touch screens for these years...
  • Reply 3 of 58
    ...and Apple will sell each and every one of them.
  • Reply 4 of 58
    Articles like this are why I laugh at Android fanboys so often. Apple makes such a profit on their products and they're always a year or two ahead and moves like this just keep them in the lead until they innovate again and leave everyone else scrambling to catch up.
  • Reply 5 of 58
    So where are the posters that want Apple to give all their cash holdings back to the shareholders with a huge tax fee thus reducing the stock value doubly with only a little, short-term benefit to the shareholder, instead of investing in longterm component acquisitions that can put them a step ahead of their competitors as needed while still being able to turn out a healthy profit? I feel bad for the people that have no sense of savings.
  • Reply 6 of 58
    MacProMacPro Posts: 17,835member
    The company that comes up with an alternative technology for touch screens other than LCD could do very well round about now!
  • Reply 7 of 58
    Quote:
    Originally Posted by digitalclips View Post


    The company that comes up with an alternative technology for touch screens other than LCD could do very well round about now!



    Just make sure they started work on it 10 years ago.
  • Reply 8 of 58
    Quote:
    Originally Posted by Logisticaldron View Post


    So where are the posters that want Apple to give all their cash holdings back to the shareholders with a huge tax fee thus reducing the stock value doubly with only a little, short-term benefit to the shareholder, instead of investing in longterm component acquisitions that can put them a step ahead of their competitors as needed while still being able to turn out a healthy profit? I feel bad for the people that have no sense of savings.



    While $3.9B to secure supplies is pretty substantial, Apple is sitting on a much larger pool of short-term assets domestically. They've been talking about potential acquisitions for years as if they are stockpiling for some big buyout yet most of Apple's acquisitions have been relatively small. So, yes, a case can still be made for them to do something else with the money, not to mention that it is earning a ridiculous low return of something like 1%. With inflation at around 2.00-2.50% this year, that stockpile has essentially lost value. At least go buy something else. Apple established a Nevada-based investment firm specifically to manage the investment of that horde; I don't understand why the best they can do is barely better than a bank savings account.
  • Reply 9 of 58
    B.S. -- the problem other tablet makers have is that nobody wants their products. Not that they can't make enough of them.
  • Reply 10 of 58
    eaieai Posts: 417member
    Quote:
    Originally Posted by KingKuei View Post


    While $3.9B to secure supplies is pretty substantial, Apple is sitting on a much larger pool of short-term assets domestically. They've been talking about potential acquisitions for years as if they are stockpiling for some big buyout yet most of Apple's acquisitions have been relatively small. So, yes, a case can still be made for them to do something else with the money, not to mention that it is earning a ridiculous low return of something like 1%. With inflation at around 2.00-2.50% this year, that stockpile has essentially lost value. At least go buy something else. Apple established a Nevada-based investment firm specifically to manage the investment of that horde; I don't understand why the best they can do is barely better than a bank savings account.



    Agreed. Here in the UK my savings are getting about 3% and my pension about 7%, so you'd have thought a big company could get much more...
  • Reply 11 of 58
    nhtnht Posts: 4,331member
    Quote:
    Originally Posted by KingKuei View Post


    While $3.9B to secure supplies is pretty substantial, Apple is sitting on a much larger pool of short-term assets domestically.



    How much domestically vs overseas? I'm guessing that the $3.9B is spent from their overseas pool of money.
  • Reply 12 of 58
    blastdoorblastdoor Posts: 1,888member
    Why not just spend about $4 billion and take the entire supply of screens?
  • Reply 13 of 58
    aplnubaplnub Posts: 2,582member
    Quote:
    Originally Posted by eAi View Post


    Agreed. Here in the UK my savings are getting about 3% and my pension about 7%, so you'd have thought a big company could get much more...



    The more money you have in a savings account the lower the interest rate.



    Apple may just have conservative views on how to invest their money.
  • Reply 14 of 58
    Quote:
    Originally Posted by mdriftmeyer View Post


    Just make sure they started work on it 10 years ago.



    Quote:
    Originally Posted by nht View Post


    How much domestically vs overseas? I'm guessing that the $3.9B is spent from their overseas pool of money.



    From what I gather from the 10-Q, nearly HALF of the $55B position is in short-term (fairly liquid) holdings. Thats just a single country (USA). Hope they got big plans for it already. Hope they have their eye on something they're not telling us about. Perhaps Steve wants to enrage Bill Gates by buying out MSFT. Or Dell... And upon purchase, he will just liquidate the company and give all the money back to the shareholders. Muahahahahahaha
  • Reply 15 of 58
    freerangefreerange Posts: 1,584member
    Quote:
    Originally Posted by Logisticaldron View Post


    So where are the posters that want Apple to give all their cash holdings back to the shareholders with a huge tax fee thus reducing the stock value doubly with only a little, short-term benefit to the shareholder, instead of investing in longterm component acquisitions that can put them a step ahead of their competitors as needed while still being able to turn out a healthy profit? I feel bad for the people that have no sense of savings.



    Exactly - its those manipulating unethical POS institutional investors that have been manipulating Apple's stock and shouting at apple the loudest to give their incredible cash hoard out as dividends so that these investors can have a big pay day for doing nothing. This, my friends, is what you can do with a huge pile of cash - use it as a competitive advantage. Apple - brilliant. Institutional investors - not so much.
  • Reply 16 of 58
    Quote:
    Originally Posted by KingKuei View Post


    While $3.9B to secure supplies is pretty substantial, Apple is sitting on a much larger pool of short-term assets domestically. They've been talking about potential acquisitions for years as if they are stockpiling for some big buyout yet most of Apple's acquisitions have been relatively small. So, yes, a case can still be made for them to do something else with the money, not to mention that it is earning a ridiculous low return of something like 1%. With inflation at around 2.00-2.50% this year, that stockpile has essentially lost value. At least go buy something else. Apple established a Nevada-based investment firm specifically to manage the investment of that horde; I don't understand why the best they can do is barely better than a bank savings account.



    Apple has been a starving child with it's hands held open for money before, there is no chance in hell the board of directors will ever make a purchase big enough to deplete cash reserves, I just cannot see it happening.
  • Reply 17 of 58
    Quote:
    Originally Posted by deuxlavabo View Post


    B.S. -- the problem other tablet makers have is that nobody wants their products. Not that they can't make enough of them.



    HP had their demand met quite nicely for the sale of their Slate last year - of course it is not too difficult to come up with ~9000 screens I guess.
  • Reply 18 of 58
    chris_cachris_ca Posts: 2,543member
    Quote:
    Originally Posted by Apple ][ View Post


    Smart move by Apple, and they're obviously putting their enormous surplus of built up cash to good use.



    What? They didn't do anything with the cash.

    Apple did not pay cash up front.

    They signed an agreement/contract for $3.9 billion.
  • Reply 19 of 58
    So they want components to build products. Why make it sound like it is some sort of agenda to take down other companies?
  • Reply 20 of 58
    Quote:
    Originally Posted by FreeRange View Post


    Exactly - its those manipulating unethical POS institutional investors that have been manipulating Apple's stock and shouting at apple the loudest to give their incredible cash hoard out as dividends so that these investors can have a big pay day for doing nothing. This, my friends, is what you can do with a huge pile of cash - use it as a competitive advantage. Apple - brilliant. Institutional investors - not so much.



    Right. Apple is quickly becoming an essential part of our economy too. iPads and Macs are quickly being adopted in mission critical tasks. I would prefer that they left most of their cash alone for stability. We don't need another late 90s incident. Apple may one day be in a situation where they need to catch up and need cash to do it. Fortunately for Apple, nobody else has the cash (and brains) to do what it takes to create a real competitor.
Sign In or Register to comment.