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Apple experiencing shortage of displays for iPhone 5

Apple launched the next generation of iPhone, the iPhone 5 few days back. The new iPhone isn’t as interesting as it was anticipated to be, but it does have some improvement. It comes with a faster A5 processor which the company claims to be 2 times faster than the previous A4 processor, and Apple has moved on to a 4 inch screen rather than the 3.5 inch screen size which they have been using since the launch of first iPhone. Though there is a bump in specs, the iPhone 5 comes in at 7.6mm thin which makes it the most thinnest iPhone offering to this date. No, it is not the thinnest smartphone on the planet, and that record is currently held by the Oppo Finder that comes in at 6.65mm.

How did Apple manage to flatten the device? Well, Apple is always known for using smaller version of all the components. If the compact version is not available in the market, they hire companies to redesign it and present the same component in a compact format. Same has been done with the new iPhone 5’s display screen as well. Apple is using a thinner and lighter touch screen in the new device. The thinner display has been achieved by something called in-cell screen technology. It’s the first time Apple is using this technology, and it combines the display and the touch sensor into a single part, thus saving the space which is required for the extra touch sensing layer. The display is made by LG Display Co. and Japan Display Inc. The iPhone 5 is first major overhaul of iPhone product since 2010 and has managed to attract 5 million buyers in just 3 days. Yes, that’s a pretty big number and has surpassed Apple’s own record that it had set for iPhone 4S. Increase in demand also calls for increase in supply, and Apple is facing some major problems in this area.

“Apple is facing significant production constraints due to a move toward in-cell display technology,” Ben Reitzes, an analyst at Barclays, wrote in a research note yesterday. “Apple is struggling to keep up with demand.”

It’s the first time Apple is making use of this display technology, and the production of these in-cell screens is more painstaking than earlier screen types, which converts to various bottlenecks faced by component manufacturer. The iPhone lineup is the top selling product of Cupertino based technology giant, Apple, and this lineup of devices alone accounts for 2/3rd of company’s profit. The company has been able to maintain a growth, which is great, but along with growth comes challenges. When Apple declared that they were going to use this new display technology, they had also listed Sharp Corp., Japan’s largest maker of liquid-crystal displays, as one of its supplier, but seems like Sharp has been struggling in the production process as the technology is new and thus has been unable to ship the components for assembly before the debut of iPhone.

The shortage problem has translated into a 3 to 4 week waiting period for the iPhone. What are your thoughts on this?

Source: Bloomberg