Did This Supplier Spill the Beans on Apple’s iPad Display Source?
Most supply chain leaks are revealed by anonymous low-level workers that post hurriedly taken photographs of what are purported to be genuine Apple (NASDAQ:AAPL) components. For example, several images of what appeared to be LCD backlight components for both rumored iPhone 6 sizes were recently posted online. But the latest Apple supply chain leak comes straight from the top. In a move that appears to violate the typical code of silence that most Apple suppliers follow, Sharp Senior Executive Managing Officer Norikazu Hoshi revealed previously unknown details about Apple’s iPad display production in an interview with Japan’s Nikkei.
“The No. 1 plant’s output goes to just one company (Apple),” Hoshi told Nikkei. “If you look at just this plant, it certainly presents a high level of volatility risk. But if we make LCD panels for smartphones in large quantities at the No. 2 plant, we can absorb the impact even when the No. 1 plant is not doing so well.”
With nine separate facilities listed on Apple’s 2014 supplier list, it is no secret that Sharp provides the Cupertino, California-based company with components, and the Japan-based company has been repeatedly named by media outlets and analysts as a known supplier of Apple’s iPad displays. Earlier this month, insider industry sources cited by Korea’s ETNews reported that display production for the iPad Air 2 would soon be ramping up at Sharp’s plants.
Contract electronics manufacturers like Sharp are usually more discreet when discussing Apple in fear of jeopardizing their profitable supplier relationships with the company, especially since Apple has a well-known reputation for valuing secrecy. Although the information revealed by Hoshi is not especially detailed, it does allow supply chain analysts gain a better insight into how many LCD panels Sharp may be producing, which can provide a clearer picture of Apple’s overall iPad shipments.
Hoshi’s comments may have also offered insights into the technical specifications of Apple’s next-generation devices. According to Hoshi, “The No. 2 plant handles eighth-generation glass substrate (2,160mm x 2,460mm), while the No. 1 plant uses sixth-generation glass substrate (1,500mm x 1,800mm).”
So was this an uncharacteristic slip of the tongue from a longtime Apple supplier or was there something else going on? Besides naming a specific plant that supplies Apple’s LCD panels, Hoshi’s comments also revealed the uncertainty that many suppliers face when providing components for Apple. Since Apple’s production needs are based on the constantly changing demands of individual markets around the world, suppliers must be able to rapidly scale their production capabilities up or down depending on Apple’s demands. As noted by Hoshi, this uncertainty can sometimes make supplying Apple a risky gamble.
However, as reported by CultofMac, Hoshi may have also been dropping Apple a hint about the iPhone 6. According to a report from Taiwan’s Economic Daily News last month, Apple snubbed Samsung (SSNLF.PK) and Sharp as iPhone 6 LCD panel suppliers in favor of InnoLux, LG Display (NYSE:LPL) and Japan Display. Hoshi may have been cryptically referencing Sharp’s lack of iPhone 6 orders when he noted, “if we make LCD panels for smartphones in large quantities at the No. 2 plant, we can absorb the impact even when the No. 1 plant is not doing so well.”