Apple to Touch Panel Makers: Gimme All You Got!

by Gaurav Kheterpal on February 18, 2011

Apple sold 16.24 million iPhones, 19.45 million iPods and 7.33 million iPads during its fiscal 2011 first quarter. Each device sold had a touch panel, which effectively means the Cupertino-giant used up more than 40 million touch panel displays in three months. 

Therefore, it’s unsurprising to me that Apple consumes 60% of the global touch panel capacity, causing its arch rivals including RIM, Motorola and others to live with a “tight supply”, there by leading to massive component shortages and missed time-to-market windows.

To make things even more interesting, Apple plans to sell another 100 million iPhones and 40 million iPad tablets this year. With first-choice touch panel makers such as Wintek and TPK already in Apple’s bag and second-tier players unable to scale quickly to produce enough touch panels, it promises to be an interesting year ahead for other smartphone and tablet manufacturers.

“If they are trying to eat your slice of the pie, starve them to death!”

The Digitimes’ report predicts a global shortage of touch panels this year as Apple plans to go full steam to achieve the 40 million iPad sales target. It says that several OEMs including Samsung, Acer, and HP have already ditched Wintek and TPK in favor of lesser-known names such as Sintek Photronic, AimCore and others. Procuring glass capacitive touch screen panels remains a mountainous task for OEMs and they are being forced to look for lesser-suited alternatives. The mad rush for glass capacitive touch screen panels is understandable as they offer advanced multi-touch gestures and pinch-to-zoom functionality. Glass capacitive panels are used in both the iPhone and iPad.

2010 was widely hailed as the “Year of the Tablet” and going by the ominous signs so far, touch panel makers are likely to be in heavy demand this year as well. Ironical as it seems, Apple itself was a victim of touch panel shortages last year thereby causing slower-than-expected iPad supplies. In January, Apple announced a $3.9 billion investment to secure long-term component contracts and the pro-active approach seems to be paying off well. It’s fair to say that RIM, HP and other OEMs have been caught off-guard yet again.

A number of manufacturers have resorted to Plan-B of using a thin-film capacitive touchscreen display that provides the same functionality, but lacks durability and isn’t as glamorous as the standard glass displays. Whether knowingly or not, Apple has gained a massive competitive advantage by prepaying touch panel suppliers for long-term contracts. Since competitors are being forced to pay more in an attempt to outbid one another for the remaining screens, it’s not surprising to see Android tablets such as Motorola Xoom priced obnoxiously high.

The question arises yet again – is Apple too smart for its competitors? Is Apple invincible? No – it’s the simple rule of demand and supply. Your thoughts are welcome.

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Written by: Gaurav Kheterpal. www.digitcom.ca >. Follow TheTelecomBlog.com > by: RSS>, Twitter >, Identi.ca >, or Friendfeed >

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