iPhone 5 display shortages may be why Apple 'only' sold 5 million handsets in 3 days

Five million iPhone 5 handsets sold over three days wasn't enough to satisfy Wall Street's stratospheric expectations. However, according to two analysts, Apple might have been able to sell more handsets had it not been for shortages of the new display.
Written by Adrian Kingsley-Hughes, Senior Contributing Editor

Apple sold 5 million iPhone 5 handsets over the three days of the launch weekend -- a figure that disappointed many Wall Street analysts -- but the Cupertino consumer electronics giant powerhouse might have been able to sell more had display shortages not put a kink in the all important supply chain.


Read this:


iPhone 5 16GB costs an estimated $207 to build

A 16GB iPhone 5 that Apple sells for $649 only costs the company an estimated $207 to manufacture. Apple also charges an incredible $100 premium for only $10 worth of NAND storage.

Read more

With the introduction of the iPhone 5, Apple switched to a new display technology called in-cell screen technology. This takes the display and the touch sensor and integrates it into a single unit. This technology makes the overall display thinner, but it also makes it a little more expensive to produce. It's also new technology, and this means that the displays are more difficult to make, with yields being lower that expected because of defects, and it is this factor that is contributing to supply chain bottlenecks.

As reported by Bloomberg, several analysts blamed the new in-cell display, manufactured by LG Display and Japan Display, for Apple only being able to sell 5 million units over the three days.

"Apple is facing significant production constraints due to a move toward in-cell display technology," said  Ben Reitzes, an analyst at Barclays. "Apple is struggling to keep up with demand". He went on to claim that about 10 million in-cell panels would be available to Apple during the third-quarter period.

"They [Apple] needed to get a lot of products in the door during a tight window, and these supply constraints that were talked about probably did have some impact,' said Tom Dinges, senior principal analyst at IHS iSuppli.

"It’s a problem that everybody else would love to have," Dinges continued. "Even if you are going to run in to some areas where there are supply shortages, Apple is going to get a disproportionate amount of the available supply -- they [Apple] are your best customer".

Apple CEO Tim Cook doesn't see a reason to panic. In a statement he said that "we are working hard to get an iPhone 5 into the hands of every customer who wants one as quickly as possible". Cook went on to say that "while we have sold out of our initial supply, stores continue to receive iPhone 5 shipments regularly and customers can continue to order online and receive an estimated delivery date."

In other words, if you want one, order it, stand in line, and you'll get is as soon as it is made.

Image source: Apple.

Editorial standards