This may come as a shock to some Apple (NAS: AAPL) bulls, but Cupertino is indeed subjected to the same laws of physics as we mere mortals are. In fairness, I'm a major Apple bull myself, but the Mac maker is susceptible to supply shortages like any other company on Earth, even though it already has the best supply chain in the world.
Just five days after it was unveiled, Apple had already sold out of its new iPad allotment for preorders. Domestic shipping times have now slipped to as much as two to three weeks for new orders placed directly through Apple, so clearly there's a bit of a shortage relative to demand.
My next natural question was: Why aren't there enough iPads to go around? I pegged the most likely weakest supply link as the tablet's fancy new Retina Display, since it's incredibly hard and expensive to manufacture, and yields are relatively low. DisplaySearch analyst Richard Shim believed that Apple was tapping Samsung, LG Display (NYS: LPL) , and Sharp for the panels.
A few Foolish readers were skeptical. DPW824804 wrote: "If there was a severe production problem or bottleneck [because of] one or a few specific issues, it would have either been solved or would have resulted in a delay in product launch. You assume problems in production and Apple launched anyway." xmmj chimed in, "I don't think Apple would have selected a display that they did not believe would make production targets."
Well, my Foolish friends, if you don't believe Shim or me, maybe you'll believe IHS iSuppli analyst Vinita Jakhanwal. According to her, Sharp and LG both didn't make the cut as their panels couldn't pass the iGrade -- Samsung was the only supplier that could meet Apple's stringent quality requirements.
Jakhanwal told Bloomberg in an email: "The display specifications on the new iPad are very demanding in terms of the very high resolution. Achieving this high resolution without compromising on the power consumption and brightness and maintaining Apple's quality standards are supposedly proving to be a challenge for LG Display and Sharp."
She believes the pair may start pitching in Retina Display panels later in April, once they work out the kinks, but for now it appears that arch-frenemy Samsung is Apple's one and only for the displays. Until then, new iPads will be a little hard to come by.
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At the time thisarticle was published Fool contributorEvan Niuowns shares of Apple, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of Apple and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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