Apple iPad Shipments to Reach 100 Million in 2013? Or Not?

In his recent blog post, David Hsieh, Vice President at NPD DisplaySearch, addresses the iPad mini’s supply shortages, as well as the possibility that Apple will ship more than 100 million iPads in 2013.

Mr. Hsieh notes that according to NPD DisplaySearch’s Quarterly Large Area TFT Panel Shipment Report, panel makers including Samsung, LG Display, Sharp and Innolux will ship 70 million 9.7 iPad panels in 2012. Of those, 23 million will be iPad 2 XGA panels and 47 million will be new iPad QXGA panels, using both a-Si and oxide TFT technologies. While the new iPad was originally planned to replace the iPad 2, strong sales of the legacy model have continued, and panel makers have adjusted new iPad panel production downward while maintaining production of iPad 2 panels.

When Apple unveiled the iPad mini in October Hsieh observes that many criticized its $329 price as too expensive for a 7-inch segment tablet PC, given competition from other 7 tablet PCs, including Amazon Kindle Fire, Google Nexus, ASUS, and many private labels. However, there is always a strong base of customers who only want Apple products; recently, the iPad mini was voted one of the hottest consumer products of 2012 in Japan. Coinsequently the iPad mini immediately faced supply shortages for its 7.85 XGA display, supplied by AUO and LG Display. Originally, Apple planned to sell 6 million units in 2012; according to the Quarterly Small/Medium Shipment and Forecast Report, only 1.6 million panels shipped in Q312, but Apple is asking panel makers to ship more than 12 million in Q412 to fulfill the strong demand.

Mr. Hseih notes that panels for iPads are known to be hard to make, not only because of the high resolution and low power consumption requirements, but also because the wide viewing angle and high color saturation specifications require additional photomask steps in the manufacturing process. Technically speaking, standard a-Si TFT backplanes require four or five photomask steps, but the iPad and iPad mini panels require six to seven, and for panel makers with limited experience in IPS or FFS production, as many as eight mask steps may be used. Increased mask steps means longer production times and lower yield rates.

In 2013, Mr. Hseih projects that its likely Apple will adjust its product portfolio to meet strong demand for the iPad mini, and that NPD DisplaySearch believes Apple is targeting total iPad shipments of 100 million in 2013, half accounted for by the iPad mini, and 40 million new iPad and 10 million iPad 2, the latter whose production he expects to continue at least until the middle of 2013. He cites NPD DisplaySearch’s Quarterly Mobile PC Shipment and Forecast Report forecast that the 2013 tablet PC market will be over 170 million, and that if Apple hits its targets, it will continue its domination at approximately 60% market share.

However, if iPad mini volume is anything near 50 million units, Apple will need to find other panel suppliers in addition to AUO and LG Display, just as it always has three suppliers for the iPad panels. Leading candidates include Century in China, Innolux in Taiwan, as well as Panasonic LCD in Japan, which are all experienced at IPS technologies. At the same time, Apple will need to manage its iPad panel supply in the event that it parts ways with Samsung.

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