Apple aims to sell over 40 million units of iPads and over 100 million units of iPhones. The company’s financial strength, phenomenal liquidity availability, control of supplies of key components required by tablets and smartphones, makes it very competitive. Call it operations management skills or monopolistic trends, the fact remains that other tablet and smartphone manufacturers are going to face a component resource crunch. The two known largest manufacturers of LCD screens touch screens and display components namely Wintech and TPK seem to be under control by Apple for touch screen supplies. With Apple’s financial strength and operations management skills we rest assured that Apple would have booked both these manufacturers to the hilt, putting massive pressure and component resource crunch on all other smartphone manufacturers.
Apple’s long term agreement with vendors and announcement of billions of dollars in pre-payments as well as capital expenditure, has put its competitors on a back foot. This situation has made competitors move away from these two major suppliers Wintech and TPK, turning their focus to other smaller manufacturers and suppliers. In the situation of supply and demand anomaly, touch screen panel prices are bound to go up. Not only this, with Apple’s being already the most competitively priced product in the market, there are rumors that Apple may decide to drop prices even further and try to kill the competition totally. To augment this information was the announcement by Wintech announcing their new Vietnam initiative, setting up a new manufacturing plant for the manufacture of touch screens, mainly for the high-end products of iPhone and iPad. There have also been reports of Apple partnering up with Sharp Electronics to build a $1.2 billion liquid crystal display production line in Japan, and even news of Apple and Toshiba partnering in building of LCD production plants and many such other speculations.
With the LCD display and touch screen display being the single-most expensive component in smartphones and tablets, it is but natural that Apple would have planned well in advance their component resource provider, to prevent the eventuality of short supply of inputs.