Sharp Dramatically Cuts iPad Display Production

Sharp Display has reduced the output of 9.7-inch display panels at its Kameyama, Japan, plant to the bare minimum needed to keep the line running. Sources cited by Reuters said this month's near-halting of production follows a slowdown that took place in December. The reason for the dramatic shift in output has not been explained by Sharp nor Apple.

There are several possibilities. First, a seasonal drop in demand could mean that Apple is managing its inventory after the holiday season. The October-December holiday season was surely a busy one for Apple and its products. Though the company has not yet reported its quarterly numbers, sales of the iPad are expected to come in at about 13 million. It makes sense that, with fewer people buying iPads after the holidays, Apple might slow down production of the device.

Another possibility, suggests Reuters, is that an iPad update is on the way. Reports have already pegged Apple making significant changes to the iPad 5 later this year. One of the changes to its premier tablet is an altered shape, which would require different glass and display panels.

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Apple could be reacting to a shift in popularity of the larger iPad. The iPad Mini, launched in November, has been a popular seller despite some of its drawbacks, such as its non-Retina Display screen. The iPad Mini, which costs less and has plenty of appeal, could be cannibalizing sales of the full-sized iPad. Perhaps Apple needs Sharp to cease producing full-sized iPad screens so it can make more for the iPad Mini.

Last, Apple could be shifting production to other suppliers. Sharp is not the only company that makes iPad panels for Apple. Sources at both Samsung and LG Display indicate that there's been no major change in their output of iPad panels.

At least one analyst firm thinks iPad sales during the fourth quarter were weaker than expected.

"The tablet shipment showed dramatic growth," TrendForce said in a report. "As Apple's 9.7-inch product saw lower-than-expected sales in Q412, the inconsistency emerged between panel suppliers' output and clients' procurement."

Earlier this week, Apple asked its iPhone 5 panel makers to slow down their production yields of the smartphone's display. The reason for the iPhone 5 production slowdown was tied to seasonal changes in demand.