Mobile Devices

January 18, 2013

Sharp Brings iPad Screen Production to Near Halt

Normally, the flow of shortages in terms of Apple products is from Apple to the market, but it's starting to seem like, these days, the shortages are starting to show up more on the demand side of the equation than ever before. In a new report brought out just hours ago, Sharp has almost shut down production of the 9.7-inch screens that drive the iPad.

A report from Reuters said Sharp was pulling the rug out from under production, and the reason why is actually pretty sound when looked at in terms of the overall market. Sharp is said to be dialing back its 9.7-inch screen production in order to accommodate increased demand for the smaller iPad Mini screen. While it wouldn't elaborate on the total production levels, the report comes from the general "industry sources with knowledge of Sharp's production plans," so it's a safe bet that's actually the case.

What the sources didn't note, however, was just how much of the slowdown was related to a change in production types, and how much of it was related to more normal seasonal slowdowns, the kind of thing that commonly happens following the holiday shopping rush. Estimates from Macquarie Research, meanwhile, suggest that iPad shipments are set to fall about 40 percent in the first quarter of 2013 over the fourth quarter of 2012, from 13 million to eight million. It should be noted that a good chunk of that drop is related to the launch of the iPad Mini, which is driving some away from the larger version to the smaller version and thus should be expected to some extent.

Oddly, there seems to be no other company making changes in terms of iPad screen production, with inside sources at Samsung reporting no change—it already dialed back somewhat as part of earlier reports--and LG reporting a small drop, mostly due to seasonal changes.

With a wide variety of competing products in the field and a recent cut of orders for iPhone 5 parts as well still in investor's minds, as reflected in the stock price. Apple's shares temporarily went under $500 this week, which is the lowest it has been in nearly a year. Hearing about shortages in demand for Apple products would have been unheard of even two or three years ago

Still, with new Apple products likely to emerge soon--if Apple holds to its history, there will likely be a new iPad and iPhone emerging by the end of the year, unless the iPad Mini was the new iPad released a bit early--it's a safe bet that the production will come back. If it doesn't, it may well mean much more than anyone expected.

Edited by Rachel Ramsey

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