Apple iPad Success Means Big Things for Parts Suppliers: Report
The success of the Apple iPad, and the expected competing products to follow from Google, HP, Microsoft and others, will have a major impact on the electronics supply chain, says iSuppli, benefiting firms such as Texas Instruments, Nvidia and LG Display.The success of the Apple iPad-or more exactly, its user interface-focused design-is expected to have a major impact on the electronics supply chain, as well as how electronics products are designed, research firm iSuppli detailed in an April 29 report.
Central to changes that the iPad is instigating is the way the tablet bucks conventional PC design.
"Electronics products have always been designed the same way, with a motherboard-oriented approach starting with the circuits and semiconductors on a central printed circuit board and then wrapping UI-focused elements like the keyboard and display around it," iSuppli President and CEO Derek Lidow explained in the report. "The iPad is not designed that way. It doesn't have a traditional motherboard. Rather, it is designed with the UI as the starting point: Apple started by designing the screen, the touch pad and the battery, and lastly focused on the semiconductors and where to put them. This design is what gives the product a unique feel and functionality."
RapidRepair CEO Aaron Vronko, who performed a teardown of the iPad for a better look inside, also found the iPad design to be a thing apart and enthused about its build quality. While the iPhone 3G S and Nano are good, he told eWEEK, "this is the first time where the build quality is just outstanding.")
Companies such as Google, Hewlett-Packard and Microsoft that want to compete with Apple will very much have to take the iPad's unique design into account.
"This unleashes an extremely interesting dynamic," writes Lidow. "The question of which companies in the supply chain will capture the profits from this UI-based approach will be of major importance in the coming years."
Obvious beneficiaries, iSuppli points out, are makers of the display, touch screen and electronics related to these components. In the case of the iPad, LG Display created the display module, while Hydis Technology, a subsidiary of Prime View International, owns the patent for related "advance-fringe field switching" technology.
Broadcom's Integrated Circuits and Texas Instruments also provided touch screen-related hardware, and though not specific to the iPad, Synaptics, Cypress Semiconductor and Atmel are additional touch-screen controller companies that likewise stand to benefit.
"Display companies could shift their [research and development] priorities to develop touch and UI intelligence into their products, grabbing value from other UI components and protecting them from being commoditized," wrote Lidow. "Intellectual property-savvy semiconductor suppliers could do the same. During the next five years this will become one of the most important battle grounds in the electronics value chain."
While not traditionally considered part of the UI, battery suppliers also stand to benefit, says iSuppli, naming Amperex Technology and Dynapack as vendors behind the iPad's considerable juice. Google's recent acquisition of Agnilux-a startup comprising several former employees of P.A. Semi, the chip company Apple purchased in April 2008-as well as Apple's more recent acquisition of Intrinsity.
iPad competitors, writes iSuppli, may instead turn to ARM-Core based chip designs from Nvidia or Texas Instruments.
While the iPad's so-far success in the United States led Apple to delay the tablet's international debut, on April 30 Apple and the iPad face the latest U.S. milestone-the launch of the iPad with both WiFi connectivity and 3G from AT&T.
To prepare for the 5 p.m. launch, Apple's New York flagship store on Fifth Avenue will be closed between 4 and 5 p.m.