Is Apple Cutting iPad Production?

Apple’s (NASDAQ:AAPL) display supplier Sharp has “nearly halted” production of 9.7-inch panels used to manufacture the full-size iPad — possibly with the idea of focusing on smaller screens for the iPad mini. Reuters reported that production of 9.7-inch LCD displays had “fallen to a minimal level” at Sharp’s Kameyama plant in Japan, with the gradual slowdown starting at the end of last year.

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The iPhone maker has other display suppliers, including LG Display (NYSE:LPL) and Samsung Display, though Apple has already been rumored to be reducing panel purchases from the latter, which is a division of its rival Samsung Electronics (SSNLF.PK).

Reuters sources did not say how much of the Sharp slowdown was due to seasonal changes in demand or just consumers opting for the smaller iPad mini. Concerns that the smaller iPad will cannibalize sales of Apple’s full-size tablet have existed from before the former was launched last November. The smaller, cheaper iPad mini is said to bring in lower margins for Apple than its older version, thus putting a drag on profits.

ipad miniApple has not spoken specifically of iPad mini sales numbers. However, it did announce shortly after launching the smaller tablet that it had sold three million units of the mini together with those of the fourth-generation iPad in three days. BNP Paribas calculated that the smaller Apple tablet will make up 60 percent of total iPad shipments in the March quarter.

Reports of any possible drop in iPad shipments will not be taken lightly be Apple investors already swimming in several concerns about the company’s future. The stock has been under huge pressure this week after earlier media reports that said Apple had cut orders for iPhone 5 components after seeing lower-than-expected demand for its latest smartphone.

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The iPad, a tablet market leader from the time it was first launched in 2010, has also begun facing some strong competition from rival devices, including Samsung’s Galaxy Tab, Microsoft’s (NASDAQ:MSFT) Surface, Amazon’s (NASDAQ:AMZN) Kindle line, and Google’s (NASDAQ:GOOG) Nexus 7 and Nexus 10.

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