Low in-cell touch panel yields spell trouble for the iPhone 5, Apple throws money at the problem

Low in-cell touch panel yields spell trouble for the iPhone 5, Apple throws money at the problem
In-cell touch panels are a great thing - they allow for thinner devices and improve backlight penetration for brighter displays, that's why Apple is going with them for the iPhone 5. If you can make enough of those, that is.

After TPK losing its touch panel orders from Apple because of its inability to produce an in-cell panel with the required quality and quantity, now the blessed Japan Display (joint-venture of Sony, Hitachi and Toshiba), LG Display and Sharp, are having troubles with the new technology. They were only estimated to produce 4-5 million in-cell displays in July, while Apple has booked 20-25 million for the third quarter, in order to fill the initial iPhone 5 demand.

The issues are not with the technology per se, but rather with producing enough yield to warrant the expensive manufacturing process. Japan Display is supposedly the one with the highest yield rates, and they barely touch the 50% mark, supply chain sources say. LGD, which initially was said to be improving its rates to 70-80%, is now allegedly unable to scale those into mass production, while Sharp hasn't even budged from the very low yield it managed to achieve in the first place.

Apple has reportedly put Sharp under probation, and will evaluate its production methods and results from scratch, while it is said to subsidize each panel from the others with $10-$15 to make it worth their while. These subsidies are, of course, peanuts for Apple, compared to what it will make on each iPhone 5 handset sold, but they will still raise production costs a bit. Couple that with the more expensive manufacturing each gadget with a brand new design would entail for Apple, compared to previous models at the end of their cycle, and the margin on the next iPhone might very well be slightly less than usual.

source: Digitimes

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20 Comments

1. MeoCao unregistered

Tim Cook used to be responsible for the production, since he became the CEO he obviously was losing control of that department.

8. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Apple may have to slip the iPhone 5 release date if it can't build up a large enough stockpile of inventory. Anyone for an October, 2012 release date?

17. andro.

Posts: 1999; Member since: Sep 16, 2011

maybe,they could also release an initial batch and then create those usual apple 'waiting lists' until the 'sold out' handset come back into stock circulation. Every year this situation happens,its an apple ploy to drum up iPhone rabbies fever!!

2. IamYourFather6657

Posts: 321; Member since: Jul 01, 2012

Why dont apple order from tpk and Japan Display at the same time ? Then less shortage

5. Smart

Posts: 76; Member since: Aug 20, 2011

"After TPK losing its touch panel orders from Apple because of its inability to produce an in-cell panel with the required quality and quantity" Geez man.....do u even read an article completely before jumping to make ludicrous comments.....

11. IamYourFather6657

Posts: 321; Member since: Jul 01, 2012

not as good as japan display's display . But still works Just a tiny compromise

3. akbar

Posts: 62; Member since: Feb 09, 2012

[irony] WoW Apple might have margins bellow 50%!!!! Sell the stock they are doomed!!! [irony]

4. Aeires unregistered

*cough* Samsung *cough* shouldn't have bit that hand *cough*

6. Doakie

Posts: 2456; Member since: May 06, 2009

Eh. I applaud Samsung for growing a pair an standing up to the technology tyrant Apple. Samsung put the foot down and started making great phones. Now they sell more smartphones than Apple. Plus it was probably smart for them to break ties on making Apple's displays, Samsung needs more production for its own phones.

7. structureman116

Posts: 142; Member since: Sep 14, 2010

Maybe if they paid these people more than pennies to produce this $h*t for their phones they would produce them faster. Apple makes ridiculous margins on their products while simulaneously screwing over the workers that assemble their products and make the components for them.

9. p0rkguy

Posts: 685; Member since: Nov 23, 2010

That's what happens when you f*ck with Samsung. Better start picking up those bread crumbs.

10. groupsacc

Posts: 232; Member since: Feb 28, 2012

LOL Apple trying their best not to buy Samsung displays. Samsung already had this in-cell touchscreen technology pumping out at full capacity since the original Galaxy S released more than 2 years ago. tsk tsk tsk

12. networkdood

Posts: 6330; Member since: Mar 31, 2010

I smell a rush job and lots of returns...

19. iamcc

Posts: 1319; Member since: Oct 07, 2011

Even when the phone wouldn't work unless you "held it right" people still didn't return... The phone would have to ship with absolutely no screen at all for someone to actually return an iPhone haha

13. maxican16

Posts: 364; Member since: Sep 29, 2011

I wonder how durable these panels are. Will they survive being dropped? This issue, coupled with poor yield (not even 50% for the most efficient supplier?!?), and the move apple has made towards parts glued together versus screwed together..... Well, let's just say they could be bit by this on the backside as well (warranty repairs).

14. darkvadervip

Posts: 366; Member since: Dec 08, 2010

I smell haters and jealousy. SG3 having a ton of quality issues I should know I work with the warranty department. To this date wp7 phones are the best quality with less issues just need wp8 to bring a better update and I think Microsoft will be the winner in the end.

15. lyndon420

Posts: 6382; Member since: Jul 11, 2012

I would assume that you don't see as many WP's coming through your warranty department because people need to buy a product first before they can claim any kind of warranty. (here comes the thumbs down for stating a fact)

18. andro.

Posts: 1999; Member since: Sep 16, 2011

Agreed,we don't have any faulty wp returns because we generally don't sell any to begin with. As little as it has sold it has been still noticed that the lumia 800 has had its considerable problems. From what I've seen day in day out the s3 has had very few doa claims

16. Nooby

Posts: 2; Member since: Jun 30, 2012

hahah nice one lyndon

20. Fuego84

Posts: 357; Member since: May 13, 2012

Why so many displays, oh that's right they are all ready taking IPhone 5S into consideration.

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