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Friday, November 25, 2011, 05:24 pm PT (08:24 pm ET)

WSJ: Apple investing in Sharp plant for iPad 3 displays

Sharp is said to be ramping up production of LCD panels for the next-generation iPad after an investment from Apple for its manufacturing facilities, according to a new report.

Sources told The Wall Street Journal on Thursday that Sharp will produce the panels at its Kameyama No. 2 plant in central Japan. According to one person familiar with the matter, Apple has invested an unspecified amount in Sharp's factories.

Sharp already provides screens for the iPhone and is expected to also serve as a supplier for the next iPhone. Both the third-generation iPad and the sixth-generation iPhone are expected to launch next year, the tipster said. Japanese newspapers reported in April that Apple will tap Sharp for next-generation "low-temperature poly-silicon" technology to go into the next iPhone.

The report appears to corroborate comments from an analyst earlier this week. Peter Misek with Jeffries claimed recently that Sharp will provide IGZO (indium, gallium, zinc) LCD panels for the next iPhone and iPad. IGZO panels would allow for thinner designs and improved battery performance.

"The IGZO technology is perfect in that it offers near-OLED power consumption while having a lower cost and thinness that is only 25% greater than OLED, based on our checks," Misek wrote.

Sharp


Adding Apple's iPad orders is seen as a big win for Sharp because the device's market dominance should provide steady volume for the manufacturer.

"This would allow Sharp to count on a more stable sales volume and would help its technology gain more attention," Mizuho Investors Securities analyst Nobuo Kurahashi told the Journal.

Late last year, rumors emerged that Apple was looking to invest a "large portion" of a $1.2 billion LCD manufacturing facility that Sharp was building. Reports of the investment surfaced again this summer, though some have suggested that Apple simply made an advance payment rather than investing in the plant..

Samsung and LG Display are widely believed to be the current suppliers of iPad LCD screens. Some industry watchers believe that Apple's growing legal battle with Samsung may have prompted Apple to diversify its suppliers. LG has also reportedly suffered quality issues with its iPad panels that may have contributed to limited supply of the iPad 2 earlier this year.

Apple admitted this April during a quarterly earnings conference call that it faced the "mother of all backlogs" with the iPad 2. The second-generation tablet remained in short supply for months after its March launch.

One recent report claimed Samsung, LG Display and Sharp have already begun stockpiling LCD panels for the third-generation iPad in preparation for assembly early next year. The three suppliers are said to have built a total of three million panels in October and November.

The iPad 3 is widely believed to feature a high-definition display with double the resolution of the previous generation. However, the near-Retina Display quality of the alleged 2,048 x 1,536 pixel screen has introduced several technical issues into the mix. For instance, Apple is rumored to be evaluating whether to add a second LED light bar to handle the upgraded display. Suppliers have also reportedly faced challenges with mass production of the screens.