Is This Apple Supplier Creating ISSUES for iPhone 5 Launch?

Apple (NASDAQ:AAPL) may not be able to meet demand for its new iPhone, as Sharp Corp., one of its main suppliers, is falling behind schedule on production of screens for the much-hyped device, a source told Reuters on Friday. The news comes just weeks before the expected launch.

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The Japanese display maker is being weighed on by high costs that have cut into its margins on the screens, raising questions as to whether Apple will step in to provide financial incentives to speed up production, the source said. The source gave no indication as to how far behind output has fallen.

Apple still won’t own to a mid-September launch of a seventh-generation iPhone, but Sharp President Takashi Okuda said on August 2 that his couldn’t would begin mass production and shipments from its Kameyama LCD plant in central Japan this month. That facility is widely known to produce screens for Apple.

Apple is planning a major product launch on September 12, and many speculate it will be the long-awaited iPhone 5, along with its latest mobile software update, iOS 6. However, rumors have also been circulating that Apple is working on a 7-inch iPad that could compete with lower-end devices produced by Amazon (NASDAQ:AMZN) and Barnes & Noble (NYSE:BKS).

While it seems all but certain Apple will release the iPhone next month — after all, it’s been a year since the iPhone 4S arrived, and a fall launch would be in keeping with Apple’s usual timeline — the iPad Mini also be launched next month. If Apple is trying to build up supply of both devices, that would certainly increase demand on display makers like Sharp.

The new iPhone screens are expected to be thinner than previous versions, with embedded touch sensors in the liquid crystal display, thus eliminate the touch-screen layer found in current iPhones, and making them more sensitive to touch. The screens are also thought to be 30 percent bigger than those on current iPhones.

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