Production of iPhone Screens Delayed at Sharp
Japan's Sharp Corp. hasn't started mass producing screens for Apple Inc.'s next iPhone, a person with knowledge of the situation said Friday, signaling potential supply problems for the U.S. company as it gears up to unveil its next-generation smartphone next month.
Context & Ripple Effects
Sharp entered 2012 betting its turnaround on advanced panels: it began mass production of IGZO displays in April amid rumors Apple would use them, just as it absorbed a record $4.7 billion annual loss, a ¥138.4 billion first-quarter operating loss, and 5,000 planned job cuts. With Apple preparing to unveil its next iPhone within weeks, LG announced on August 22 that it had already started producing the new screen, leaving Sharp as the laggard among the reported suppliers.
The Wall Street Journal's Friday report — sourced to a person with knowledge of the situation and picked up by Reuters and a wide swath of tech outlets — lands at the worst possible moment for Sharp: the company needs high-volume customer orders to fund its restructuring, and missing the initial iPhone production ramp puts its most valuable prospective order in doubt.
First-order effects
- LG is positioned to capture the bulk of early screen supply for the September iPhone unveiling, since it began production nine days before this report while Sharp had not yet started mass output.
Second-order effects
- For a company already cutting 5,000 jobs after a ¥138.4 billion quarterly loss, losing or shrinking the iPhone allocation would deepen Sharp's cash squeeze and raise the stakes on its rumored LCD TV panel deliveries to Foxconn in Q3 2012 as an alternative revenue channel.
Third-order effects
- Apple's practice of qualifying multiple display suppliers for one device means a single vendor's ramp failure no longer delays launches — it redistributes volume toward suppliers like LG, shifting bargaining power to whichever panel maker can hit yield first, a dynamic the display-panel redesign delays of later iPhone cycles echo.
The trend: Smartphone display supply is consolidating around whoever can ramp new panel technology fastest, turning each iPhone generation into a live stress test of suppliers' balance sheets and manufacturing readiness.