Cover lens supply key for Apple to reach 2Q11 iPad 2 shipment goal, say sources
A sufficient supply of cover lenses for touch panel modules will be the key for Apple and other vendors to reach their shipment goals for tablet PCs in second-quarter 2011, according to sources at upstream touch panel suppliers.
Context & Ripple Effects
Apple's iPad 2 ramp has been built on a deliberate broadening of its touch supply chain: after adding new touch panel suppliers for iPad 2 in December 2010, panel volumes followed quickly, with LG Display and Samsung together shipping 2.7 million iPad panels in November alone (per DigiTimes). Mass shipments were then pushed to an April start, per the January reporting that moved iPad 2 mass shipments into April.
This report shifts the bottleneck question downstream of the panels themselves: upstream touch panel sources tell DigiTimes that cover lenses — the glass layer sitting atop each touch module — are now what determines whether Apple and rival tablet vendors hit their second-quarter 2011 shipment goals. The claim is sourced and unconfirmed, but it fits the pattern of a supply chain where every tier has become the constraint in turn.
First-order effects
- Apple's second-quarter iPad 2 shipment target now depends less on panel output than on whether touch module makers can source enough cover lenses, making lens capacity the immediate gating item for the April-launched ramp.
- Upstream cover lens suppliers with available capacity become the most sought-after vendors in the touch chain this quarter, as module assemblers compete to lock in allocation.
Second-order effects
- Touch panel makers will lean on their own upstream relationships — or add lens sources — to protect share in the iPad 2 build, echoing the multi-sourcing move Apple itself made in December 2010.
- Rival tablet vendors chasing the same Q2 window are bidding against Apple for the same lens supply, so any shortage raises costs or delays launches across competitors' lineups, not just Apple's.
Third-order effects
- If the lens constraint holds, tablet production becomes a chain-of-bottlenecks problem — displays one quarter, cover glass the next — pushing OEMs toward deeper second-sourcing at every component tier rather than just the display.
- Sustained tightness in touch components would consolidate leverage with whichever suppliers control scarce inputs, reshaping bargaining power in the tablet supply chain through 2011.
The trend: Tablet manufacturing in 2011 is becoming a rolling game of component bottlenecks, forcing Apple and its rivals to multi-source every tier of the touch stack to keep launch schedules intact.