Apple Adds Additional Supplier for iPad 2 Displays

Apple has added an additional supplier for displays for the iPad 2, according to Taiwan Economic News (TEN). AU Optronics of Taiwan has reportedly been contracted to produce up to 100,000 9.7” displays per day for Apple, or 30 million per year, and the company has apparently reserved half the production capacity of a “fifth generation” plant for the task.

The site didn’t name its source, and it couldn’t get confirmation on the deal from AU Optronics, but TEN’s article includes such details as the company expecting yield rates as low as 60-70% due to Apple’s high specification demands. That suggests the source is from inside AU Optronics itself.

The article also said that Apple offered three to four times more than “the going price for displays of the same size” to AU Optronics in order to secure the contract and reserve so much of the company’s production capacity. That will put a serious crimp in competitor’s margins, as Apple is reducing supply available to those competition, but it will also have a negative impact on Apple’s own margins (if the article has its facts straight).

Apple is currently thought to source many of its iPad and iPad 2 displays from Samsung, a company that competes with Apple’s iPad with the Android-powered Galaxy Tab. TEN suggests that adding AU Optronics as a display provider is as much about securing additional supply as it is about getting its supply of components from companies that don’t have a vested interest in their own tablet device, though there’s no source for the idea.