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Wednesday, June 29, 2011, 10:30 pm PT (01:30 am ET)

Amazon tablet could face production constraints driven by Apple's iPad 2

Amazon could have a difficult time securing manufacturing commitments for its rumored LCD tablet, as Apple's iPad 2 is predicted to occupy most of the available tablet production capacity in the later half of the year, according to a new report.

Taiwan industry publication DigiTimes reported Thursday that touch panels Wintek, HannStar Display and J Touch may receive orders for a touchscreen tablet from Amazon for the second half of 2011. Sources said Amazon has reportedly held talks with the above manufacturers, as well as TPK Holdings.

However, Wintek also takes touch panel orders from Apple for the iPad and iPhone and recently revealed that its production schedule "will become tight in the second half of the year," possibly making it difficult for the manufacturer to accommodate orders from Amazon, the report noted.

Meanwhile, sources said TPK, a major supplier of touch modules for the iPad, "has been reluctant to make a commitment to suppling touch panels to Amazon on concerns of capacity."

According to the report, Amazon is looking to produce an initial batch of 1.5-2 million tablets. An earlier report from the publication claimed the online retailer will release the devices in September with a sales target of 4 million tablets in 2011. Meanwhile, Piper Jaffray analyst Gene Munster predicts sales of an Amazon Android tablet to reach 2.4 million in 2012.

An earlier report, also from DigiTimes said Amazon has placed orders with Quanta Computer to build an LCD tablet and plans to partner with E-Ink holdings on the device.

It has been suggested that Apple books as much as 60 percent of the world's touch panel capacity, outmaneuvering competitors by offering upfront cash payments. "Second tier players" have reportedly been pushed out of the market entirely due to a lack of glass capacitive touch panels.

With Apple taking up the lion's share of capacity, competitors have allegedly felt the squeeze. According to one report, Research in Motion's BlackBerry PlayBook was delayed for a month in part because of the iPad 2 success.

Staggering demand for the Apple's latest tablet caused tight supply last quarter. Even after selling every iPad 2 it would make, Apple faced "the mother of all backlogs" with the device.

However, recent checks by analysts point to significant improvement in Apple's iPad supply constraints.