Apple allegedly fronting Sharp north of $1 billion to make the high-resolution displays of its future
As we wrote yesterday, Sharp has been probed to be the default high-resolution display supplier for the iPad 2 Plus, but eventually Apple wasn't cosher with the price tag of those displays. We also know from Sharp itself that its new low-temperature polysilicon (LTPS) displays allow for higher resolutions and less power drag than the current display on the iPhone 4, for example, which uses LTPS of the previous generation. Coupled with its homebrew invention of LCD screens that use oxide semiconductor, dubbed IGZO, Sharp has obviously won the heart of Apple, despite that Toshiba already demoed a 4" LCD screen with 720x1280 pixels of resolution. We are reposting Sharp's own words from last quarter's earnings report:
"Meanwhile, in mobile LCDs, we will accelerate conversion of production lines at the Kameyama Plant and a shift to growth areas, including LCDs for smartphones and tablet terminals. At the same time, we will work to commercialize mobile LCDs using oxide semiconductor, InGaZnO (IGZO), developed in collaboration with Semiconductor Energy Laboratory Co., Ltd. This will allow us to create high value-added LCDs for next-generation mobile devices, featuring high definition, thin profile and low power consumption, which will contribute to enhancing the competitiveness of our LCD business."
Sharp's state-of-the-art Kameyama LCD plant
Sharp's stock went up 2% on the news, since a significant investment from Apple means guaranteed future revenues. Considering yesterday's rumor, though, that Apple is postponing the next iPad because Sharp's high-res tablet screen still comes too expensive, and LG or Samsung couldn't supply enough yield, how profitable will this venture be for Sharp remains to be seen.
Apple is known for twisting the hands of suppliers to obtain the most favorable pricing, and it is such a large customer that it usually does, leaving component manufacturers and assemblers like Foxconn with single digit profits. Helping Sharp retool its plants for the next generation screens that are to go into the iPhones and iPads of the future would mean that either it wants Sharp to add capacity for the millions of future gadget sales, or it is supplying expensive equipment that the Japanese otherwise wouldn't buy, in order to drive the production price down, or maybe both.
Apple is no stranger to buying equipment or building plants for suppliers, in order to ensure adequate supply of parts with consistent quality, but the moral of all these Sharp rumors these days seems to be that Cupertino is trying to break away from LG and Samsung with everything, including screen supplies. We don't blame it, considering that both South Korean companies are competing with Apple on the Android arena, but we'd wager to guess that Sharp's displays produced in a Japanese plant will come more expensive than some of the Chinese production by Samsung and LG, for instance, which would eat into Apple's profit margins, so Cupertino might be taking measures to keep costs in check.
1. Droid_X_Doug (Posts: 4721; Member since: 22 Dec 2010)
Cupertino is taking measures to keep costs in check. But they are also taking measures to keep supply available for iStuff and out of the hands of competitors. Notice how Sharp doesn't compete with Apple?
2. andro (unregistered)
The simple fact here is that apple is moving away from companies it cannot apply total control over or campanies which aren't passing it out with superior products.
3. pong (unregistered)
They should buy it, it's bad for the economy just sitting on a bunch cash. Let it circulate!!!
4. p0rkguy (Posts: 671; Member since: 23 Nov 2010)
Honestly Sharp can probably get more out of Apple if they pushed it. Apple is just asking around display manufacturers that they're still on neutral grounds with them. If there aren't any suppliers for Apple, Apple will either have to push out entry-level and mid-level products, cut profit margins, increase prices, and/or create their own display manufacturer. Right now they don't have a lot of choices on which manufacturer.
That's what happens when you attempt total dominance while still being supplied by other manufacturers and end up making them enemies.
5. cheetah2k (Posts: 696; Member since: 16 Jan 2011)
Tough luck for Apple alienating themselves thru patent wars. Evntually apple will end up having to build their own manufacturing plants using their own technology to make their products affordable. Apple can kiss Big profits goodbye when this happens.
The likes of Lg & Samsung already have this game won hands down :)
6. nyamo (Posts: 273; Member since: 19 Mar 2011)
sharp deals in android, but only in japan. and considering that most of the sharp android phones are on docomo while softbank has the iphone, it woul be safe to assume that sharp is a good bet for a new supplier of parts. also i thhink this is great news, sharp as a brand may not be a known elsewhere but in asia sharp is king and the displays they are capable of making are of top quality
7. biggles (Posts: 208; Member since: 15 Oct 2009)
Sharp? Really? Glad I'm not invested in iOS.
8. wumberpeb (Posts: 380; Member since: 14 Mar 2011)
While I dislike Apple and their strong-arm tactics and cult-like following, I can't say I wouldn't do the same if I were planning on the next best screen for my upcoming device. Nobody's in the business to pay more than they have to. If I were Steve Jobs, I'd probably bully people around too...
...and if I were Steve Jobs, I'd also kick myself in the nuts several times because I look like an idiot in black turtlenecks