iPhone 6 rumor rollup for the week ending May 10

Popping inventory, Apple’s secret factories, June madness

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“A surprising Korean report [by Korea IT News] this afternoon emphatically states that Sharp, the leading company in the small & medium-sized LCD panel market, is starkly changing its supply strategy….”writes Jack Purcher. “According to the industry on May 8, Sharp stopped the production of LCD panels for iPad as of January this year and started supplying Samsung with small and medium-sized IGZO panels instead.”

The problems with this assessment are almost as great as those associated with Stabley’s assessment that Apple is building its own assembly plants, as this March 27 story by The Wall Street Journal makes clear: “Sharp Corp. is banking on a proprietary technology with an unproven track record to revive its fortunes after it soon reports what's expected to be the largest annual loss in its 100-year history.”

Thoroughly reported, the Journal story clarifies the technology’s benefits, reveals its importance to Sharp, and puts the company’s product and financial challenges in context.

“The technology is IGZO, short for indium gallium zinc oxide, and it's a semiconductor material developed to make liquid crystal displays. It appears to be a major step forward from the more common silicon-based alternatives, promising twice as much battery life, sharper images and a more than fivefold increase in the sensitivity of touch screens for smartphones and tablets.”

Here’s how important IGZO is to Sharp, according to the Journal story: “’IGZO will be the technology to rescue Sharp,’ Takashi Okuda, the company's president, told a news conference Nov. 1 [2012] as the electronics maker warned that its financial situation was so tenuous it was worried about its future as a ‘going concern.’”

But the rescue is not assured. From the Journal: Sharp is “on track for a loss of nearly $9 billion [!] over the past two fiscal years, and its interest-bearing debt dwarfs its cash on hand by a ratio of seven to one.” The story continues: “Ironically, the exclusive advances made by Sharp's IGZO screens are limiting the company's reach. Major electronics manufacturers often insist on at least two suppliers for every key component to ensure stable supply and maintain pricing leverage.”

As noted above in “iPhone 6 will be assembled in Apple’s own factories,” Apple may have been heavily involved in 2012 in propping up Sharp’s troubled finances. Samsung recently took about a 3% equity stake in Sharp, and according to the Journal is set to expand its purchase of Sharp IGZO displays, currently found on Samsung products sold only in Japan. It’s not clear that Samsung’s stake is to persuade or compel Sharp to “drop” Apple, given how desperately the display maker needs more, not fewer, customers.

The Journal notes two other display makers are investing in IGZO, but don’t seem to have reached the level of Sharp: Innolux Corp., a unit of Taiwan's Hon Hai Precision Industry Co. (parent of Foxconn, a main assembler for Apple products) started producing IGZO displays in small quantities in February 2013; and AU Optronics Corp., also based in Taiwan, has developed IGZO displays, “but it hasn't said if or when it will start mass production.”

So we know that Sharp is ramping up production of screens for the next iPhone. And we know that it’s not.

John Cox covers wireless networking and mobile computing for Network World.http://twitter.com/johnwcoxnwwjohn_cox@nww.com



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