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Sharp curbs iPad screen production as demand shifts to smaller tablets

posted 18 Jan 2013, 03:58 by Mpelembe   [ updated 18 Jan 2013, 03:58 ]

Japan's Sharp has nearly halted production of screens for Apple's iPad as demand shifts to smaller tablets such as the iPad mini.

TOKYOJAPAN (FILE) (REUTERS) - Sharp Corp has halted production of 9.7 inch screens for Apple Inc's iPad two sources said, as the pioneer of tablet computers tries to clear unsold stocks of its flagship computer product.

Sharp's iPad screen production line at its Kameyama plant in central Japan has halted after output slowing at the end of 2012 as Apple adjusts its inventory, the industry sources with knowledge of Sharp's production plans told Reuters.

"Sources told us today that Sharp has more or less halted production of it's iPad 9.7 inch screens at its Kameyama plant in central Japan, so the suggestion there is that Apple's sales of iPads are not as good as may have been anticipated. And what it looks is though as you're seeing is suffering from cannibalisation of itself in that consumers are shifting to the iPad mini rather buy the iPad," explained Reuters Senior CorrespondentTim Kelly who was close to the story.

Any indication that iPad sales are struggling would add to concern that the appeal of Apple products is waning after earlier media reports said it is slashing orders for iPhone5 screens and other components from its Asian suppliers.

Apple, the reports said, has asked state-managed Japan Display, Sharp and LG Display halve supplies of iPhone panels from an initial plan for about 65 million screens in January-March.

Apple is losing ground to Samsung, as well as emerging rivals including China's Huawei Technologies Co Ltd and ZTE Corp.

"It's bad news for everybody. If Apple is selling less, then the reaction is going to be very quick as Apple is very big, is a very high profile company, any change to its fortunes causes rapid reaction from investors. For Sharp, it's more a question of survival. Apple is a big customer for them. Their small LCD business is its strongest part of its business so far, and it's maybe at the core of what it sees as its revival," Kelly explained.

For its iPad, in addition to Sharp, Apple also buys screens from LG Display, its biggest supplier, and Samsung Electronics. Both LG Display and Samsung Display declined to comment.

A source at Samsung Display, however, said there had not been any significant change in its panel business with Apple, which has been steadily reducing panel purchases from the South Korean firm.

A person who is familiar with the situation at LG Display said iPad screen production in the current quarter had fallen from the previous quarter ending in December, mainly due to weak seasonal demand that is typical after the busy year-end holiday sales period.

Apple also faces stiffening competition in tablets from a growing crowd of rival products from makers including Samsung with its Galaxy and Microsoft Corp's Surface.

A consumer shift to smaller seven inch screen devices, which Apple responded to late last year by launching its iPad mini for 329 U.S. dollars, are adding pressure.

Looking to take a bite out of Apple in the smaller segment are Inc with itsKindle and Google Inc with its Nexus 7.

CEO, Tim Cook, who is credited with building Apple's Asian supply chain, has overseen several gadget launches, including the iPhone 5, the latest iPad models and the iPadmini during his first year, is under pressure to deliver the kind of product innovations that wowed consumers during Steve Jobs' tenure to keep his company's profit growth stellar.