Apple iPad Screen Production Declines: Reuters

Sharp has cut production of Apple iPad screens, according to Reuters.

The manufacturer’s Kameyama plant, located south of Tokyo, is reportedly producing a “minimal level” of screens, following a “gradual slowdown” that began at the end of 2012. The newswire drew its information from unnamed “industry sources with knowledge of Sharp’s production plans.”

LG Display and Samsung Display also produce screens for the tablet; an unnamed source at LG Display told Reuters of a similar dip in production, almost certainly due to “weak seasonal demand that is typical after the busy year-end holiday sales period.” Apple has been reducing its business with Samsung Display, so that falloff is also expected.

Nonetheless, the Reuters report has sparked a flurry of Internet chatter over Apple’s future. The iPad sells millions of units a quarter, powering a significant portion of the tech giant’s bottom line—and in light of that, any sort of sales decline could spell serious trouble.

Or maybe not: Apple recently launched the iPad Mini, a 7.9-inch tablet sold at a lower price-point than the full-sized iPad. Is it possible that demand for the iPad Mini is cannibalizing the market for larger iPads, compelling Apple to cut production for the latter? It’s certainly possible—although given the iPad Mini’s relative newness, it could be several quarters before any cannibalization trend becomes clear. If Apple sells enough iPad Minis, it could even increase its overall tablet sales even as fewer “regular” iPads move off store shelves.

Whatever the explanation, Apple currently suffers from the perception that it’s somehow on the proverbial ropes, despite enviable sales and margins. Its stock price has tumbled in recent weeks, and analysts have voiced pessimism about the next quarterly earnings report. A recent article in The Wall Street Journal suggested that components orders for the iPhone 5 have been cut, leading to still more cries of doom from pundits, although a number of journalists have done their best to poke holes in the Journal’s work.

It might be safer to argue that Apple is in the midst of a transition period—one in which it’s attempting to diversify its market (i.e., the iPad Mini) in the face of more sophisticated competition from the various Google Android device manufacturers. Such transitions inevitably come with dips and bumps. But it’s a stretch to say that one of the world’s largest companies is locked in some sort of death spiral.

 

Image: Apple

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