Apple's $3.9 Billion Investment Was in LCD Displays?

During Apple's Q1 2011 Financial Results conference call, Apple revealed that they had made long term commitments with three companies in the amount of $3.9 billion. When questioned about the exact component, Tim Cook declined to answer citing competitive reasons.

During the opening statements, however, Peter Oppenheimer revealed that the agreements began in the September and December quarters:

"During the September and December quarters, we executed long-term supply agreements with three vendors through which we expect to spend a total of approximately $3.9 billion in inventory component prepayment and capital expenditures over a two-year period. We made approximately $650 million in payments under these agreements in the December quarter, and anticipate making $1.05 billion in payments in the March quarter"

Looking back at the previous quarters, it seems to us that Apple is likely securing LCD supplies from various vendors for the years to come.

044443 applelcd

When the iPad originally launched, the supplies were initially constrained specifically due to limited production of its LCD displays. Apple's supplier for the original iPad's display was LG. In July, LG's CEO Kwon Young-soo told reporters that they were simply unable to meet the production demands for the iPad:

"Demand (from Apple) keeps growing and we can't meet it all. Apple may have to delay launches of the iPad for some countries due to tight component supplies and strong demand. We are considering increasing production lines for iPad products but overall supply is likely to remain tight until early next year."

That experience alone would likely have incentivized Apple to explore more reliable supplies of LCD displays for their growing iOS portfolio.

In December, we heard two separate reports that Apple was investing $1.2 billion with Toshiba and Sharp separately. The rapid-fire sequence of the reports made us question that one might have been a mistake, especially since Toshiba actively denied the claim. But, in retrospect, one or even both of the reports seem to have been true. The Sharp rumor reported that Sharp would be spending 100 billion yen ($1.2 billion) to build production lines for "small to midsize LCDs, with Apple Inc slated to purchase bulk of the output for its iPhone". While the iPhone might be a target for the small LCDs, the reports description of "midsize" LCDs seems more appropriate for the iPad.

Apple was said to be shouldering the bulk of the investment and will buy up most of the panels that Sharp produces. The factory would not begin production, however, until 2012. Meanwhile, the Toshiba plant was rumored to be ready for production in late 2011.


Meanwhile, Hon Hai / Foxconn is said (video embedded above) to be considering a $1.2 billion investment in Hitachi's LCD arm to build a new factory in Japan that will begin operating in 2012. While Apple is not known to be involved in this deal specifically, Foxconn is one of the biggest manufacturers of the Apple iPhone and iPad and is expected to start supplying LCDs for Apple's iPad in 2011 through its Chimei Innolux subsidiary. Interestingly, despite Toshiba's previous denials, this news report says that Toshiba is indeed building a new LCD plant in 2011 which is set to supply Apple.

The latest reports peg Apple's 2011 iPad display orders at 65 million units (up from 15 million in 2010), showing that Apple will need an enormous supply of displays as the iPad's market continues to grow. It also suggests that Sharp and Toshiba may have been two of the three target companies for Apple's massive $3.9 billion long term investment.

Popular Stories

maxresdefault

Review: M1 Max MacBook Pro After Three Months

Wednesday January 19, 2022 11:30 am PST by
It's now been a few months since the M1 Pro and M1 Max MacBook Pro models launched in October, and MacRumors video editor Dan Barbera has been using one of the new machines since they debuted. Over on the MacRumors YouTube channel, Dan has shared a three month review of his MacBook Pro to see how it has held up over time and how it's changed his workflow. Subscribe to the MacRumors YouTube ...
airpodsinear 1

AirPods Save Woman's Life With Feature Everyone Should Know

Friday January 21, 2022 2:13 am PST by
Apple's AirPods have been credited with saving a woman's life after a potentially fatal fall, People reports. When a 60-year-old florist in New Jersey tripped and hit her head in her studio, she lost consciousness and awoke heavily bleeding. With nobody around to call for help, she realized she had her AirPods in, and used a "Hey Siri" command to call 911. An operator was able to stay on the ...
iphone se 2020 top

New iPhone SE Likely to Launch in April Based on Production Timeframe

Wednesday January 19, 2022 6:44 am PST by
Apple suppliers will begin producing display panels for the third-generation iPhone SE this month, with final assembly of the device likely to start in March, according to information shared by display industry consultant Ross Young. Based on this production timeframe, Young believes the third-generation iPhone SE is likely to launch in the second half of April, or perhaps in early May at...
iphone 13 earpods

Apple to Stop Including EarPods With Every iPhone Sold in France From Next Week

Friday January 21, 2022 3:21 am PST by
Apple will no longer include EarPods with every iPhone sold in France, starting on January 24, according to a notice posted by a French carrier (via iGeneration). Apple was previously required to include EarPods in the box with the iPhone due to a French law that required every smartphone sold in the country to come with a "handsfree kit," but the law has now been changed in favor of reducing the ...
Spring 2022 Apple Products Feature

New iPad Air, Macs, and iPhone SE With 5G Likely to Be Announced at Apple Event This Spring

Thursday January 20, 2022 8:32 am PST by
Earlier this week, Bloomberg's Mark Gurman tweeted that Apple "will be holding a spring event" to announce a new iPhone SE and other hardware. In a recent edition of his newsletter, Gurman said the event is likely to occur in March or April. Gurman did not elaborate on what "other hardware" will be announced at Apple's purported spring event, but rumors suggest at least four products are...
appleeducation

Apple's US Education Store Now Requires Institution Verification to Buy Discounted Products

Wednesday January 19, 2022 2:22 am PST by
Apple is now requiring that customers in the United States verify that they're active students, teachers, or staff members at an educational institution in order to access education discounts on products. Previously, little verification was needed for customers to purchase products through Apple's education store in the United States. Apple's education stores offer models of the iPad and Mac ...
AirPods 3 New Firmware Feature

Apple Updates AirPods 3 Firmware to Version 4C170

Tuesday January 18, 2022 11:46 am PST by
Apple today released a new 4C170 firmware update for the AirPods 3, an update from the prior 4C165 that was made available in December. Apple does not offer details on what's included in new firmware updates for the AirPods‌, so we don't know what improvements or bug fixes the new firmware brings. There is no standard way to upgrade the ‌AirPods‌‌ software, but firmware is...
appleprivacyad cleaned

iOS 15 Patched Security Hole That Potentially Exposed Users' Private Apple ID Information to Third-Party Apps

Thursday January 20, 2022 3:32 am PST by
Apple patched two significant security vulnerabilities when it released iOS 15 that could have potentially exposed users' private Apple ID information and in-app search history to malicious third-party apps and allowed apps to override user Privacy preferences, Apple has revealed in a recent support document update. With most iOS, macOS, tvOS, and watchOS updates, Apple provides a list of...
apple watch series 7 aluminum colors yellowbg

Apple Watch Charging Bug Fixed in watchOS 8.4 Release Candidate

Thursday January 20, 2022 4:01 pm PST by
The watchOS 8.4 release candidate that was seeded to developers and beta testers this morning addresses an ongoing bug that could cause some Apple Watch chargers not to work properly with the Apple Watch. Back in December, we reported on a growing number of charging issues that Apple Watch Series 7 owners were facing. Since watchOS 8.3, there have been a number of complaints about...