iPhone sales at 5 million sold but display shortage may be to blame

// September 25th, 2012 // Mobile

The iPhone 5 quickly sold 5 million devices over the first weekend on sale, about 25% more than the iPhone 4S sold in its first few days. For a device marketed as a “new generation” device rather than a minor upgrade, it likely should have sold much more (as evidenced by Apple’s drop in price on Wall Street who expected 10 million units to be sold). However, the cap appears to have been reached anyway – the device is now sold out. Apple’s ability to keep up with demand is likely due to the new ultra-thin display the device uses.

The iPhone 5 comes in significantly thinner (7.6mm) than the iPhone 4S. This is due to the new display introduced with the iPhone 5, one that has managed to integrate the touch sensor into the display panel. The new panel allows for a thinner device but it is much more difficult to manufacture and this has introduced a kink in the supply chain. Sharp has been unable to deliver any displays due to a defect in their manufacturing process. LG and Japan Display are rolling out screens but the in-cell technology is difficult to produce and it is thought that only 10 million displays will be delivered by the end of September. That leaves Apple in a quandary.

“Apple is facing significant production constraints due to a move toward in-cell display technology. Apple is struggling to keep up with demand”.

There may be a benefit to the shortage though. Users are reporting a slew of problems with the new iPhone 5 including the infamous maps crap app, a flimsy feel to the device (oh come on, it’s too light?), poor Siri weather forecasts with screwed up locations, sub-par battery life, light leaking from top right corner of screen, aluminum casing that scratches too easily (but should make it feel less flimsy – yes?), finicky WiFi radio with poor reception, and the ambiguous “no SIM card installed” error. A bit of delay in device production might not be a bad thing and may give Apple time to sort out some of the bugs.

Sources: Bloomberg, Barclays

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