Apple's Retina iPad Mini Supplies Might Only Meet One Third Of Demand This Quarter

There's a prediction that Apple's new iPad Mini with the Retina display won't be able to meet expected demand this quarter. Indeed, the prediction is that the shortage will be so large that as many as two thirds of expected users won't be able to purchase the new tablet.

The report comes from IHS who have been looking at the supply chain for the necessary screens for the iPad Mini model and they conclude that the supply just isn't there.

IHS observed that there is a limited production of the tablet’s new Retina Display.

The shortage in supply means Apple will achieve one-third of the 8.9 million unit volume of the first-generation iPad mini shipments during the final three months of 2012, the first quarter when that product was sold.

Actual demand for the original mini was well above 8.9 million.

With demand for the new mini in the fourth quarter expected to equal or exceed the nearly 9 million units of its predecessor model, supply and demand will be severely out of balance, IHS said on Friday.

Do note that there's a certain amount of supposition in this: it's only if demand is as large or greater than that for the original iPad Mini that supplies of the new Retina model will fail to meet that demand. But if it is (and it seems a reasonable assumption that the demand will be there) then production of those Retina screens just won't be able to cope.

The reason is simply Apple's voracious appetite for the components that go into its models. There's plenty of the larger screens at Retina pixel densities to be put into the iPad Air, that's not a problem. And there's plenty of the smaller screens for the iPad Mini at lower than Retina pixel densities. There's just not that many of the smaller, iPad Mini, screens at Retina densities yet. It's most certainly not an insurmountable problem. IHS expects the shortage to be solved in the first quarter 2014. But Apple needs so many pieces of a product when it does launch something new that the production lines can have problems trying to satiate demand as they start up. As anyone who has ever actually run a production line knows, it can take a month or three to bed the process down when you first start up. It just takes time to be able to produce enough of the part at the required quality.

So, the general finding here is that quite a lot of people who want an iPad Mini with the Retina screen for the holidays are going to be disappointed. There just aren't going to be as many of them as people likely want to purchase. It's possible that this will affect Apple's stock price a little down the road. It depends upon how people see the likely short sales of the new model in this coming quarter. If everyone understands that it's just a parts supply issue, not a comment on how many people actually want the new model, then not much I would have thought. But if Apple do report 3 million or so sales and people think that's the level of actual demand then it might have quite a large effect.