iPhone 5 release: Display production begins June -- WSJ

By Jonny Evans

The Wall Street Journal (WSJ) this morning reports Apple [AAPL] in June will begin production of new 4-inch displays for use in its iPhone 5 (the sixth generation of its device).

[ABOVE: iPhone smuggling is a big, big business in China.]

iPhone -- now with a 4-inch screen

Coming as it does from a respected source these claims will ignite expectation ahead of the Fall introduction of the next iPhone. It tells us (a) that Apple intends popping a 4-inch display inside the new device and (b) that production of these displays begins in June.

Given the need to stockpile millions of these displays in order to build millions of iPhones, commencing display production marries well with claims of a September launch for the device. Apple's display partners include Sharp (as expected), LG and Japan Display.

A related report yesterday claimed Apple to have booked huge memory chip orders with Japanese firm, Elpida, securing around half that company's total chip production from its plant in Hiroshima.

Future diversification?

The WSJ report also carries an interesting comment from Mizuho Investors Securities analyst Nobuo Kurahashi, who notes: "The smartphone market has become diverse, but the iPhone still sets the agenda," adding, "If Apple ever released a lower-priced iPhone, that would be more of a sign that the changing market environment is beginning to affect the company."

In saying this the analyst appears to be responding to the growing market share of non-Apple smartphones, suggesting that should this become a problem for the iPhone maker it may yet diversify its iPhone range. I think that's a rubber-clad certainty at some future point in Apple's evolution within this market.

With Samsung emerging as Apple's biggest current opponent in the smartphone space, it's no surprise Apple's chosen to abandon its new adversary when it comes to display and memory production for the new iPhone.

Samsung versus Apple

It remains open to speculation if Samsung will continue manufacturing the iPhone's ARM-based processor for Apple.

Last year's conversations included claims Apple intended migrating processor production from Samsung to TSMC, but production problems allegedly betrayed this plot. Interesting then to note a Digitimes report which claims TSMC has been placing large orders for silicon wafers with Taiwanese electronics materials firms. Has Samsung lost its profitable iPhone processor supply contract? We don't yet know.

The iPhone is wildly popular in the Asia Pacific market. Apple seems set to secure even more growth in the region, with a plan to launch its smartphone via the world's largest carrier, China Mobile. Speaking to investors in Hong Kong yesterday, China Mobile's Chairman Xi Guohua said "China Mobile and Apple both have the will to strengthen cooperation. When there is more specific news, we will disclose it."

Even though it doesn't officially support it, China Mobile already claims 10 million iPhones used on its network. With over half a billion subscribers on the network, no one should have any doubt that introduction of the iPhone 4S or iPhone 5 through that carrier will have a huge impact on Apple's smartphone sales, securing China's place as the company's biggest market.

On strength of the Wall Street Journal's report, Apple appears to have studied the competitive landscape in order to ensure its next iPhone combines usability with new features guaranteed to give its competitors a black eye.

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Copyright © 2012 IDG Communications, Inc.

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