iPhone 5 Release May Be Delayed – Sharp's Production Of New iPhone Displays Reportedly Behind Schedule

By Alexandra Burlacu | Sep 04, 2012 09:14 AM EDT

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Apple is expected to unveil its next-generation iPhone on Sept. 12, and anticipation is higher than ever, but new reports emerged on Friday, Aug. 31, indicating that the device's launch may be delayed. Japan's Sharp Corp., one of the three suppliers of liquid-crystal display panels for Apple, reportedly has yet to start mass producing screens for the new iPhone.

According to a Reuters report on Friday, citing an anonymous source, Sharp is struggling with high costs that have cut into its margins on the displays, and has not started mass producing screens for Apple's next-generation iPhone. The delay signals potential supply issues for Apple, and raises the question of whether the U.S. tech giant will provide financial incentives to speed up production, the source told Reuters.

Sharp had reportedly planned to start shipping iPhone screens to Apple by the end of August, said people familiar with the matter. Mass production has been delayed, however, and it remains unclear at this point when the Japanese display maker can start shipping the panels.

Implications

Sharp is one of Apple's three suppliers of liquid-crystal display panels for the next-generation iPhone. The other two suppliers are South Korea's LG Display Co. and Japan Display Inc., a new company that combined the display units of three Japanese electronics makers. According to the people briefed on the matter, LG Display and Japan display have already started shipping the screens to Apple, the Wall Street Journal's Juro Osawa reported.

It is unclear at this point whether the delay at Sharp could result in supply problems for the new iPhone. Apple has declined to comment on the matter.

The next-generation iPhone is expected to use in-cell LCD panels, a new technology that integrates touch sensors into the LCD. The new technology would make the smartphone's screen thinner by eliminating the need for a separate touchscreen layer. On the other hand, the in-cell panels are reportedly more difficult to mass produce than conventional LCD panels.

LG Display CEO Han Sang-beon said last week that his company has started mass producing in-cell LCD panels.

On Aug. 2, Sharp president Takashi Okuda said his company would start mass production and shipments from its Kameyama LCD plant in central Japan by the end of the month. The facility is known to produce screens for Apple, but Sharp has declined to confirm that Apple is a customer. Kameyama "is operational," Sharp spokeswoman Miyuki Nakayama told Reuters, without offering details on output or shipment levels.

High Stakes

In an increasingly competitive market, the stakes are very high for the next-generation iPhone. Apple's biggest rival in the smartphone market, South Korea's Samsung Electronics, has just unveiled a slew of new gadgets on Thursday, Aug. 30, at the IFA trade show in Berlin. Together, the two companies dominate the global smartphone market with roughly 50 percent of the market. Apple and Samsung are also locked in a global legal dispute over patents for their mobile devices. In the U.S., a federal court jury ruled that Samsung infringed on Apple's patents, and awarded Apple $1.05 billion in damages. The show, however, is far from over, and competition between the two tech giants will only get fiercer.