Apple Shifts iPad 2 Display Orders from LG to Samsung Due to Quality Issues

DigiTimes reports that Apple has been forced to shift some of its orders for iPad 2 display panels from LG Display to Samsung and Chimei Innolux after quality issues at LG resulted in unacceptable yields with the panels failing to pass drop tests. Apple has reportedly suspended new display orders with LG, which had been the largest panel supplier for the iPad 2, until the issues can be addressed.

LGD's 9.7-inch panels for the iPad 2 reportedly failed to pass drop tests, during which their backlight units (BLUs) failed, the sources said, adding the panels' yield rates were unable to meet Apple's requirements.

While LGD is working on solutions, the maker's monthly shipment goal of four million units has become unlikely. July shipments of the 9.7-inch panels reached only 2.5-2.6 million units, the sources said.

Much of the slack appears to have been taken up by Samsung, which reportedly produced nearly two million iPad 2 display panels during the month of July, significantly higher than its usual monthly output of slightly over one million panels.

Problems at LG and competitive issues with Samsung could serve to benefit Chimei Innolux, which is attempting to increase its share of display production for the iPad 2. The company's close relationship with iPad manufacturing firm Foxconn could also drive more production to Chimei Innolux going forward.

Apple initially struggled to meet strong demand for the iPad 2, with production constraints resulting in lower than expected sales during the device's launch quarter. But shipments grew last quarter to over 9 million units as Apple's production finally ramped up to meet the demand, and just last week the company dropped shipping estimates for new iPad 2 orders to the minimum "within 24 hours".