When Apple (NASDAQ:
) quietly revealed that it wanted to
stop using Samsung supplies
, many wondered if the company
could survive without
its South Korean partner. According to
, the analyst behind the Asymco blog, Apple may have increased
its 2012 expenditures by more than $2 billion to give Sharp -- a
rumored Apple supplier -- a helping hand.
takes this speculation one step further by surmising that Apple
poured $2 billion into the ailing display maker.
This news comes only days after Sharp executives admitted that
may not recover
from the company's $5.6 billion loss. It also raises a lot of
Historically, Apple does not make big investments. It may
spend millions on advertising and billions on manufacturing, but
it is unlikely to spend $2 billion just to help an ailing
Dediu speculates that Apple would do this to "ensure both
continuity of supply and a balanced supplier base (offsetting
Samsung, another supplier)." He believes that if Sharp entered
into some form of bankruptcy, the company's plants could be up
for grabs by creditors, who may take the plants offline. This
could jeopardize Apple's production capacity, "irrespective of
contractual obligations," he said. "I believe that Apple's late
and unprecedented expenditure was to secure this asset."
Apple is unlikely to confirm or deny the validity of these
claims. As one of the most secretive companies in the world,
Apple won't even talk about its suppliers. Many have speculated
that Sharp displays are in the iPhone 5, but that hypothesis has
yet to be proven.
While Apple cannot afford a supply disruption, the company can
always look elsewhere. LG and Sony (NYSE:
) are among the many manufacturers who produce high-quality,
high-resolution displays. They could easily fill the void left
behind Sharp if and when the company goes into bankruptcy -- or
The real problem is timing. If Sharp is indeed the supplier of
the iPhone 5, Apple may have been forced to keep the company
going long enough for it to support the device through Christmas.
Once the new year comes and sales begin to decline, Apple will be
free to switch suppliers again.
In doing so, the Cupertino, California-based tech giant could
face new challenges. Before the iPhone 5 was released, numerous
reports suggested that the company's new display manufacturer was
struggling to meet Apple's specifications.
Those specifications are not likely to change much with the
iPhone 6. While Apple may upgrade the device with an improved
camera and a faster processor, the next iteration is expected to
maintain the current form factor.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.