Apple’s aggressive role out of the iPhone 5 to 100 countries by the end of the year may be thwarted if the company’s channel partners are unable to meet demand.
ISI International Analyst Brian Marshall told AllThingsD: “Apple must feel confident about its supply of in-cell display panels.”
Jefferies analyst Peter Misek agreed, telling AllThingsD: “This timeline is way, way more aggressive than expected. It should finally put to bed the unfounded view that this iPhone launch will be hugely capacity-constrained.”
Apple’s announcement that it Apple’s plan to ship the iPhone 5 to 100 markets by year’s end did raise some eyebrows. The plan contrasts with the roll out of the iPhone 4S, which was available in 70 countries by the end of 2011.
The iPhone 5 ships next Friday to nine key markets, including Australia. The following week it will ship to 22 more countries. The iPhone 4S debuted in seven countries and then 22 more a couple of week’s later.
Apple’s aggressive role out of the iPhone 5 is astonishing given the fact that the company is widely thought to be looking for new partners to supply some of the parts that Samsung was providing, including the screen and memory chip.
Samsung and Apple have been at war in court recently, with each company saying that the other has stolen its patented technology. News that Apple is looking for alternative suppliers suggests that the outcome of the Apple vs Samsung California trial could cost Samsung far more than the US$1 billion the company is supposed to pay Apple for infringing its patents.
The switch has already started. The first batch of new iPhones doesn’t include memory chips or displays supplied by Samsung, according to reports. Samsung does still provide the A6 chip for use in the iPhone, although Apple is said to be considering switching to Taiwan Semiconductor Manufacturing Company (TSMC) to supply processors from the second-half of 2013. According to analysts at Nomura Equity Research, the A6 processor features a dual-core Cortex-A15, developed by a UK company.
NH Investment & Securities Co analyst Lee Sun Tae thinks it’s natural that Apple doesn’t want to be dependent on Samsung, but he did hint that “there’s only so much volume Apple can get from other vendors. They will probably have to come back to Samsung later on.”
The new screen technology in the new iPhone is reportedly being provided by Sharp, and Toshiba, Elpida Memory and SK Hynix are said to be providing the memory chips.
There is some concern that Apple could lose out if it severs ties with Samsung. Polar Capital fund manager Ben Rogoff said: “Apple needs strong suppliers. Apple needs to be careful what it wishes for. If this relationship deteriorated, you’d see Apple looking to diversify its supplier base, but that’s hard to do.”
The next few months will certainly be a testing time for Apple’s new partners. Digitimes suggests that Apple will be putting the pressure on suppliers to up production levels. According to DigiTimes sources, Japan Display and LG Display have a production yield close to 80 percent for in-cell touchscreen panels while Sharp has a yield rate at 30-40 percent. Sharp, said to be providing the screen for the first batch of iPhone 5s, is only expected to become a major panel supplier to Apple after the it proves it can improve its yield rate in the fourth quarter of 2012.
Despite the demand, Digitimes suggests that its research shows that Sharp and Japan Display will be capable of satisfying demand for the iPhone 5 in 2013.