Apple may delay the launch of iPad 2 Plus, which is considered as a successor to iPad 2, in to 2012 from late 2011 due to certain supply chain issues.
It's our understanding that the 'iPad 2 Plus' continues to have retina display manufacturing challenges, consistent with recent press reports, and we now see a 2011 launch as unlikely, FBR Capital Markets Craig Berger wrote in a note to clients.
Berger said that Apple's iPad 2 Plus build estimates were revised downward for the fourth quarter of 201l 4Q11 due to his understanding of ongoing retina display manufacturing challenges.
We think the launch of an enhanced iPad 2 Plus is unlikely in 2011 as Apple only plans on building 1M units in late 4Q11, the analyst said.
In the past, the company's threshold for a commercial product launch has been to have inventory of at least 3 million to 5 million units before green lighting the launch. The chief component constraint appears to be the LG display as the analyst believes they are requiring an additional 3-5 months to solve resolution issues.
With the delay of the iPad2 plus, Apple actually increased production for the iPad, mainly for the WiFi only and WCDMA SKUs by 40 percent in anticipation of a strong holiday season.
For the fourth quarter 2011, iPad builds increased by 26 percent to 17 million units as iPad 2 WiFi builds were revised meaningfully higher to 10.5 million units from 7.2 million units.
Earlier, it was rumored that Apple may launch iPad 2 Plus in late 2011. In July, Berger had said that Apple could migrate the iPad's display resolution from a current pixel density of 132 pixels per inch (ppi) to 250-300 ppi for the iPad 2 Plus. Meanwhile, the iPhone 4's screen is 326 ppi.