Corporate News
Customers queue to enter an Apple Store in the southern German city of
Munich on September 21, 2012 as the iPhone 5 went on sale. Suppliers to
Apple are scrambling to get enough screens ready for the new iPhone 6
smartphone as the need to redesign a key component disrupted panel
production ahead of September expected launch. AFP PHOTO | CHRISTOF
STACHE
By Reiji Murai, Reuters
In Summary
- Apple is known to make tough demands on its parts suppliers for new iPhones and iPads as it competes to create designs, shapes, sizes and features to set it apart and command a premium price in a fiercely competitive gadget market.
- Apple has scheduled a media event for September 9, and many expect it to unveil the new iPhone 6 with both 4.7 inch (11.94cm) and 5.5 inch (13.97cm) screens - bigger than the 4-inch screen on the iPhone 5s and 5c.
- The pressure on Apple for stand-out products has increased as Samsung Electronics and, more recently, a clutch of aggressive, lower-cost Chinese producers such as Xiaomi and Lenovo Group have eroded the US company's market dominance.
Suppliers to Apple are scrambling to get enough
screens ready for the new iPhone 6 smartphone as the need to redesign a
key component disrupted panel production ahead of next month's expected
launch, supply chain sources said.
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It's unclear whether the hiccup could delay the launch or
limit the number of phones initially available to consumers, the sources
said, as Apple readies larger-screen iPhones for the year-end shopping
season amid market share loss to cheaper rivals.
But the issue highlights the risks and challenges
that suppliers face to meet Apple's tough specifications, and comes on
the heels of a separate screen technology problem, since resolved, in
making thinner screens for the larger iPhone 6 model.
Cupertino, California-based Apple has scheduled a
media event for September 9, and many expect it to unveil the new iPhone
6 with both 4.7 inch (11.94cm) and 5.5 inch (13.97cm) screens - bigger
than the 4-inch screen on the iPhone 5s and 5c.
Two supply chain sources said display panel
production suffered a setback after the backlight that helps illuminate
the screen had to be revised, putting screen assembly on hold for part
of June and July.
One said Apple, aiming for the thinnest phone
possible, initially wanted to cut back to a single layer of backlight
film, instead of the standard two layers, for the 4.7-inch screen, which
went into mass production ahead of the 5.5-inch version.
But the new configuration was not bright enough and
the backlight was sent back to the drawing board to fit in the extra
layer, costing precious time and temporarily idling some screen assembly
operations, the source said.
Output is now back on track and suppliers are working flat-out to make up for lost time, the supply chain sources added.
Japan Display, Sharp Corp and South Korea's LG Display have been selected to make the iPhone 6 screens, the sources said.
Representatives for those three suppliers, and for Apple, declined to comment.
Tough demands
Apple is known to make tough demands on its parts
suppliers for new iPhones and iPads as it competes to create designs,
shapes, sizes and features to set it apart and command a premium price
in a fiercely competitive gadget market.
This can cause glitches and delays, including
screen problems that crimped supplies at last year's launch of a
high-resolution version of Apple's iPad Mini.
It also highlights the danger for suppliers of depending too heavily on Apple for revenues, creating earnings volatility.
"Currently, there's a small shortage in supply of a
specialised component for our communication devices," said a spokesman
for Pegatron, which assembles iPhones. "This kind of problem regularly
occurs and the impact on production is negligible."
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