Sharp, a key Apple supplier for iDevice displays, has “nearly halted production” of the 9.7-inch display found in Apple’s full-sized iPad, according to two sources speaking with Reuters Friday. It is not yet known if the cuts are due to shifting demand to the smaller iPad mini, or a result of an excess in supply as the company heads into the traditionally low performing first calendar quarter.
The production cuts primarily came from Sharp’s manufacturing plant in Kameyama, Japan, with the plant now running at the minimum level necessary to keep production in operation. This month’s drastic reduction follows a gradual slowdown in orders at the end of 2012.
Of note, other suppliers for the 9.7-inch iPad screen, including LG Display and Samsung Display, have not yet seen similar reductions in orders.
Sources at Apple were not able to provide any comment on the situation to Reuters, and the company has not made any public statement. Sharp also refused to shed light on the alleged production change, stating that the company “does not disclose production levels.”
While the lack of similar cuts at other iPad display suppliers increases the likelihood that the Sharp cuts are due to seasonal inventory management, any news of cuts has the potential to rattle Apple investors, who already punished the company’s stock earlier this month after The Wall Street Journal reported a sharp reduction in component orders for the iPhone 5 due to “weak demand.”
Many analysts have since challenged the WSJ report, arguing that any cuts are due to inventory management and improving yields, not poor demand. Despite the assurances, investors maintained their bearish attitude on the company, sending the price below $500 for the first time in nearly a year.
Apple is set to report its first fiscal quarter results next Wednesday, January 23, at 5:00 PM EST. Many predict that this will be one of the most important earnings reports in the company’s history, with Sterne Agee analyst Shaw Wu arguing that the company’s typically conservative guidance could reinforce the market’s perception of the company and send the stock falling even further.
The Mac Observer will have live coverage of Apple’s results call and provide analysis of the results and the market's reaction.
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