Supply of New iPad Mini Will Be 'Ridiculously Tight' in Q4

EL SEGUNDO, Calif. -- Supplies of Apple Inc.’s second-generation iPad mini are expected to fall well short of demand in the fourth quarter due to limited production of the tablet’s new Retina Display, according to IHS Inc. (NYSE: IHS).

Based on current supply data, shipments of the new iPad mini with Retina Display will fall below 4 million units and potentially amount to less than 3 million units in the fourth quarter. This would represent as little as 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 the 8.9 million figure, leaving Apple with a huge backlog of orders for the mini at the start of 2013. 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.

"Apple is being rather vague about the exact availability date of the new iPad mini with Retina Display, simply stating that the product would ship later in November,” noted Rhoda Alexander, director of tablet research at IHS. “The company has good reason to be coy about the exact release date, given that supply of the new mini is going to be ridiculously tight in the fourth quarter. The heart of the problem is supply constraints on the new Retina panel.”

Production is still ramping up on the 7.9-inch Retina panel with low yield rates limiting production, according to IHS display research. With most of the production occurring late in the quarter and the challenges inherent in the new system design, iPad manufacturing is expected to lag well behind panel production in the fourth quarter. Supply will improve substantially in the first quarter of 2014, but with Chinese New Year falling at the end of January, supply difficulties on the new mini could linger into February or March of 2014.

IHS Inc.