Apple Secures 60% of Touch-Panel Capacity for iPad 2 – Competitors Scramble

One of Apple’s most overlooked strengths is its ability to manage its supply chain, giving it a competitive advantage over rival manufactures.  Apple has demonstrated this strength again, reportedly securing 60% of global touch panel capacity, causing supply constraints for other vendors planning to build tablets.

According to Taiwanese website DigiTimes, Apple has secured touch panel capacity to meet demand for iPads in 2011. The websites’ sources claim Apple placed large orders with all of its iPad suppliers and that OEM vendors are having issues meeting demand due to low yield of touch panels.

Sources from tablet PC makers also pointed out that the component shortage is causing their shipment volumes to be unable to catch up with their orders, especially for second-tier players. Touch panels are currently suffering the most serious shortage due to Apple holding control over the capacity of major touch panel makers such as Wintek and TPK, and with US-based RIM, Motorola and Hewlett-Packard (HP) also competing for related components, second-tier players are already out of the game, the sources noted.

DigiTimes’ component supplier sources claim that the shortage is limited to glass capacitive touch panels and that thin-film capacitive touch panels, mainly used in smartphones, are still available.  Most tablet manufacturers prefer not to use thin-film panels as they are less durable and don’t have the same touch characteristics as the more widely used glass displays.

Apple’s move to secure such a large portion of the touch-panel capacity has forced other vendors such as HP and Samsung to get their screens from smaller touch-panel suppliers like Sintek Photronic. According to DigiTimes, “Apple’s strategy of taking up most of the capacity should help the company quickly expand its sales, while reducing its competitors’ shipment growth.”

Apple is expected to release the new iPad 2 within the next 60 days and other rumors point to Apple possibly releasing an iPad 3 as soon as this fall.   To meet the demand for its new tablets, we wouldn’t be surprised to see Apple secure other component capacity, causing further supply chain issues for its competitors.

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