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Apple iPhone 6 screen delay leaves supply chain scrambling

The iPhone 5, which is set to be replaced with a larger screen iPhone 6

Suppliers to Apple are scrambling to get enough screens ready for the new iPhone 6 smartphone as the need to redesign a key component has disrupted panel production ahead of next month's expected launch, supply chain sources said.

It is unclear whether the hiccup could delay the launch or limit the number of phones initially available to consumers, as Apple readies larger-screen iPhones for the year-end shopping season amid market share loss to cheaper rivals.

But the issue highlights the risks and challenges that suppliers face to meet Apple's tough specifications, and comes on the heels of a separate screen technology problem, since resolved, in making thinner screens for the larger iPhone 6 model.

Cupertino, California-based Apple, has scheduled a media event for Sept. 9, and many expect it to unveil the new iPhone 6 with both 4.7 inch (11.94 cm) and 5.5 inch (13.97 cm) screens - bigger than the 4 inch screen on the iPhone 5s and 5c.

Two supply chain sources said display panel production suffered a setback after the backlight that helps illuminate the screen had to be revised, putting screen assembly on hold for part of June and July.

One said Apple, aiming for the thinnest phone possible, initially wanted to cut back to a single layer of backlight film, instead of the standard two layers, for the 4.7 inch screen, which went into mass production ahead of the 5.5-inch version.

But the new configuration was not bright enough and the backlight was sent back to the drawing board to fit in the extra layer, costing precious time and temporarily idling some screen assembly operations, the source said.

Output is now back on track and suppliers are working flat-out to make up for lost time, the supply chain sources added.

Japan Display, Sharp Corp and South Korea's LG Display Co have been selected to make the iPhone 6 screens.

Earlier this month, Japan Display, said to be the lead supplier for the new iPhone panel, said orders for "a large customer" - which analysts said was Apple - arrived as expected, but shipments may be delayed in the July-September quarter.

The pressure on Apple for stand-out products has increased as Samsung Electronics Co and, more recently, a clutch of aggressive, lower-cost Chinese producers such as Xiaomi Inc and Lenovo Group have eroded the U.S. company's market dominance.

The iPhone 6 unveiling has been widely anticipated to bolster momentum for Apple shares, which have risen by a third, to above $100 each, since the company posted strong first quarter earnings in late April.

For more information, please visit: http://uk.reuters.com/article/2014/08/22/us-apple-iphone-idUKKBN0GM0N620140822

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