eWEEK content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
Strong demand for the Apple iPad is squeezing LG Display’s supply of screens, according to the manufacturer’s CEO, and could strain inventory of the tablet device as it enters new markets.
“Demand keeps growing and we can’t meet it all. Apple may have to delay launches of the iPad for some countries due to tight component supplies and strong demand,” Kwon Young-soo, CEO of LG Display, told reporters from Reuters and other media outlets July 22. “We are considering increasing production lines for iPad products but overall supply is likely to remain tight until early next year.”
LG Display’s supply issues demonstrate how the marketplace success of the iPad, in the months following its April release, has become a double-edged sword for Apple and its suppliers: along with increased earnings, both face enormous pressure to meet customer orders.
The iPad and other devices could lead Apple to spend $16.2 billion on OEM semiconductors in 2011, according to recent estimates by research firm iSuppli, enough to rank it second behind Hewlett-Packard at $17.1 billion. Apple’s semiconductor spend for 2010 was estimated at $12.4 billion, a growth rate of 54 percent; iSuppli calculated that the company will need to increase spending by another 30.4 percent to reach that 2011 target.
“An advancement in the rankings means that a company has been successful in introducing new products and that it is allocating more dollars in search and development-two factors that, incidentally, feed innovativeness as well,” Min-Sun Moon, an analyst for iSuppli, wrote in a July 21 research note. “Apple’s expected rise to No. 2 … means that the company’s investment in its new smartphone and tablet has paid off-and will continue to do so for some time to come.”
For the third quarter of fiscal 2010, Apple reported sales of 3.27 million iPads, along with 3.47 million Macs, 8.4 million iPhones, and 9.41 million iPods. That was enough to buoy the company’s revenues to $15.7 billion, with a net quarterly profit of $3.25 billion.
“We’re increasing [iPad] capacity as quickly as we can,” Tim Cook, Apple’s chief operating officer, told analysts and media during a July 20 earnings call. However, he gave no indication of when that capacity would begin to match demand for the iPad, which has been selling roughly 1 million units per month.
Cook also suggested that the iPad could prove devastating to Apple’s hardware rivals: “If it turns out that the iPad cannibalizes PCs that, I think, [that] is fantastic for us because there is a lot of PCs to cannibalize,” he said, adding: “It’s still a big market.”