Is This an Obvious Culprit for the iPhone 5 Shortage?

In-cell touch panels used by Apple (NASDAQ:AAPL) in the new iPhone 5 may be contributing the most to a component shortfall that has resulted in supply staying behind demand for the device. The technology, which combines the display and the touch sensor into a single part, has resulted in a thinner and lighter screen for the smartphone. However, Apple has been forced to delay shipping estimates of pre-orders of the phone over the last two weeks because it is unable to manufacture units as quickly as it needs.

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The screen panels are being supplied to Apple by LG Display (NYSE:LPL) and Japan Display. While Sharp was also expected to supply the screens, the Japanese company has struggled to reduce defects in its product and start shipments, Bloomberg said.

“Apple is facing significant production constraints due to a move toward in-cell display technology,” Barclays analyst Ben Reitzes wrote in a research note. According to Reitzes, about 10 million units of in-cell panels will be available in the calendar third quarter.

“This is like the opening weekend for the summer blockbuster movie,” IHS iSuppli analyst Tom Dinges told Bloomberg. “They needed to get a lot of products in the door during a tight window, and these supply constraints that were talked about probably did have some impact.”

However, Dinges added supply constraints may be short lived because Apple’s spending might will make it the first in line when parts become available.

Supplies of the new baseband chip that helps the phone connect to LTE wireless networks may also be short, with Qualcomm (NASDAQ:QCOM) acknowledging manufacturing had been constrained.

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