Wednesday, March 23, 2011, 05:00 am PT (08:00 am ET)
Apple may agree to component price hikes to secure touch panel supplyApple could agree to pay more for touch panel components from overseas suppliers to secure supply in the face of the Japan earthquake, according to a new report.
DigiTimes reported Wednesday that Apple has been in talks with Taiwan-based component makers about touch panel pricing, and the Cupertino, Calif., company has allegedly considered some price increases in negotiations. Sources reportedly said that Apple is looking to secure "sufficient supply" of components for hot-selling products like the iPhone and iPad.
While the move could have a negative impact on Apple's gross margins, it would help to secure the availability of touch panels in the near future. In addition, the report said that a price increase would be a "great help" to the overseas supply chain.
But it wouldn't help Apple's competitors, sources reportedly said. Apple agreeing to a price hike for touch panels would "increase pressure" on other vendors who make tablet computers and touchscreen smartphones.
Apple allegedly plans to build 40 million of its popular iPad in 2011. In order to reach that goal, and keep up with crushing demand for the iPad 2, Apple has reportedly booked more than 60 percent of the total global supply chain touch panel capacity.
Concern over touch panel supply has grown since the earthquake and tsunami disaster struck in Japan. Last week, it was said that Apple's manufacturing partner, Foxconn, has two to three weeks' worth of components stockpiled. Should the situation in Japan not improve by that time, Foxconn could reportedly face a stockout.
Even before the disaster in Japan, Apple's control of the lion's share of the global touch panel market has been predicted to squeeze the company's competitors throughout 2011. Apple Chief Operating Officer Tim Cook revealed in January that his company committed $3.9 billion toward secret long-term component contracts, money believed to be directed toward touch panel displays.
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