Apple picks Sharp, dumps Samsung for iPad 3

By Jonny Evans

The Samsung-Apple [AAPL] relationship seems on the rocks, with Apple shifting display production to Sharp, taking advantage of new and potentially cheaper production processes as it readies manufacturing for the iPad 3, iPhone 5 and in future, an Apple television, says Jefferies analyst, Peter Misek.


Sharp and Apple

Digitimes last week made the claim that Sharp has begun manufacturing for Apple. Today that's confirmed in a fresh research note from Misek.

"We believe Apple has shifted display production and that Sharp has now become a large panel supplier, based on our checks. We believe that the Gen 6 Kameyama facility has been exclusively taken over for Apple purposes with Apple purchasing $500 million to $1 billion of equipment for the manufacturing of iPad 3 and iPhone 5 LTE displays," he said.

Then it gets interesting:

The analyst thinks Sharp has already begun iPad 3 display production (two weeks ago), and adds that the display tech achieved will allow for HD resolution screens on the iPad 3, which he suggests may ship in March. The analyst also thinks Sharp's plant will be used for iPhone 5 production.

Introducing IGZO

The adopted display tech is based on IGZO (indium, gallium, zinc) processes, which offer near-OLED power consumption, is cheaper to make and only 25 percent thicker than displays made using OLED technology. This technology depends on oxide-material-based thin-film transistors, which enables manufacturing advantages.

The analyst has a host of interesting details on the new process, for example: "He believes that Apple and Sharp will jointly develop OLED panels for use in the iPhone and iPad within the next one to two years."

He describes a new printing technology Sharp and Apple have that enables OLED to be printed onto a film that's later stuck to the glass, boosting display yields to a "tremendous" degree.

Why is it less expensive?

Because it produces displays with similar performance to that of LCD, but which can be mass produced on existing amorphous-silicon TFT-LCD production lines. The IGZO transistors feature electron mobility 20-30 times higher than that of amorphous-silicon thin-film transistors, this report claims.

"The IGZO LCD panel’s performance outclasses anything attainable with conventional amorphous-silicon TFT panels," said Shuji Sako, deputy group general manager of Sharp’s Display Device Business Group.

Feeling the pain

Piling on even more agony on Apple's flailing tablet competitors, Misek also warns that Apple may intend keeping the iPad 2 on the market with a lower ($100-200 less) price. 

The analyst has a host of interesting details on the new process, for example: "He believes that Apple and Sharp will jointly develop OLED panels for use in the iPhone and iPad within the next one to two years."

This mother-lode of analysis keeps on giving: Misek also believes work has begun on a new Apple television, set for mid-2012 launch, with the display made at another Sharp facility and prompting panic among other TV makers, anxious to avoid becoming irrelevant.

Jaw-jaw, or war-war?

Meanwhile litigation between parties continues. This has driven the relationship between Apple and Samsung to the rocks, while the public relations fallout of all the litigation isn't really doing anyone any favors.

Manufacturers are pouring money into legal teams, consumers are becoming radicalized, variously accusing Apple of being "controlling" and Google et al of being "copycats", and manufacturers are being slowly forced to focus on price, rather than features.

Don't believe that? Consider this: the biggest-selling non-Apple iPad sold in the US in 2011 was the HP TouchPad, on strength of the $99 price HP sold the device at. Just 1.2 million non-iPads were sold this year. Apple sold 11.2 million in the last quarter.

The battle's tough and is raising a new discussion about the value of patent and IP law. Not only this, but regulators in Europe and, presumably, beyond are beginning to look into all this struggle to ascertain if there's anything anti-competitive going on. Samsung's unusual handling of 3G patents, for example.

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