Production issues with the iPhone 4's newfangled display will cause serious supply shortages, according to a analyst's research note posted Friday.
Apple's iPhone 4 boasts a high-pixel-density Retina display that uses technology called IPS, or in-plane switching. IPS technology is also used in the iPad. Screens for both products are made by South Korea's LG Display, according to Ashok Kumar, managing director and senior technology analyst at Rodman & Renshaw.
"Low yields on the IPS LCD panel from LG Display have dramatically impacted the production volumes for iPhone 4," Kumar wrote in his research note. "Our supply chain checks indicate that our earlier monthly shipment estimate of 4 million units have been reset by about half."
Kumar continued: "The hope is that the LG transition to Gen 5 LCD capacity by late summer could help alleviate the production bottleneck. Meanwhile there is a non trivial risk in the September quarter whereby demand for the legacy 3GS iPhone drops off faster than production can ramp up for the iPhone 4."
The IPS-based Retina display is one of the key features on the iPhone 4, according to Apple. "Thanks to the Retina display... images in movies and photos are stunning at almost any angle. That's because the Retina display's pixel density is so high, your eye is unable to distinguish individual pixels," according to Apple's iPhone 4 Web page.
"Demand will be chasing supply through September," Kumar said in a phone interview, adding that display is the single most costly component in the iPhone.
Correction at 11:00 a.m. PDT Saturday: the supplier of the display was incorrectly stated at the top of the post as LG Electronics. As stated further below, the supplier is LG Display, according to the research note by Rodman & Renshaw analyst Ashok Kumar.