For the first time, Apple is using in-cell screen technology on the iPhone 5, which combines the display and the touch sensor into a single part. That feature, which allowed Apple to make the handset slightly thinner than previous models, is also the main reason supply didn’t meet demand during the device’s first weekend of release, according to Bloomberg.
According to the report, creating in-cell screens is more “painstaking than earlier screen types, contributing to bottlenecks.”
Because of this, Sharp Corp. found it so difficult to reduce defects in screens that include the new technology that they didn’t begin shipping parts until after the iPhone debuted. In fact, these manufacturing difficulties had some worried in August that Apple would delay the iPhone 5 launch until later in the year. While that didn’t happen, the issue could limit short-term sales for the iPhone 5.
LG Display and Japan Display supplied screens for the first iPhone 5 shipment.
As Ben Reitzes, an anlyst at Barclays explains:
Apple is facing significant production constraints due to a move toward in-cell display technology. Apple is struggling to keep up with demand.
Now that Sharp is online, Apple’s supply constraints might lessen. However, in-cell screens aren’t the only part suppliers are struggling to manufacture. Supplying enough of the iPhone 5’s new baseband chip is also a concern.
Qualcomm Inc., who is the biggest maker of chips for mobile phones, has said that supplies of those parts have been constrained due to a new manufacturing process to build them. This part allows the handset to connect to LTE.
Apple announced that they sold 5 million iPhone 5 units during the first weekend, which was a sales record. That number, however, was below expectations. As this story suggests, that had little to do with weak demand, and was almost certainly caused by supply constraints.
The iPhone 5 is available in the United States, Australia, Canada, France, Germany, Hong Kong, Japan, Singapore and the United Kingdom, and will be available in 22 more countries on Sept. 28 and more than 100 countries by the end of the year. Demand for iPhone 5 exceeded the initial supply and while the majority of preorders have been shipped to customers, many are scheduled to be shipped in October.