Apple intent on diversifying suppliers with Sharp investment

iPad 2Apple intends to invest in a Sharp plant in order to bring the Japanese company aboard as an LCD supplier for iPhone and iPad manufacturing, sources told Reuters on Wednesday. If accurate, this is only the latest sign that Apple is looking to distance itself from its major supply partner, competitor and legal rival, Samsung.

Other sources speaking to Reuters said that Japanese companies are hopeful that the deteriorating relationship between Apple and Samsung will result in more contracts for them. Elpida Memory and Toshiba in particular are eager to win chip-making contracts, since Samsung has handled the foundry side of Apple’s A4 and A5 processor business, which are central components of the iPhone 4 and iPad 2, respectively.

Reports from earlier this year cited a similar display plant investment Apple was planning to make with Toshiba, to the specific exclusion of Sharp. Apple may have had a change of heart after demand for its devices continued to exceed expectations, or because, according to supply chain industry sources, LG Display recently ran into some issues related to the construction of iPad 2 LCD panels.

The renewed interest in Sharp was highlighted by MF Global FXA Securities in a note by analyst David Rubenstein on Wednesday. In the note, Rubenstein said it was “highly possible that Apple will make an investment in Sharp’s Kameyama plant to the tune of around $1 billion in order to secure a stable supply of screens for iPhones and iPads.” Sharp also announced in June that it would be changing the purpose of one of its TV plants to concentrate on making small and medium-sized LCD panels for smartphones and tablet devices.

More suppliers could hopefully result in fewer backlogs for Apple products, which means shorter waits for Apple customers. The iPad 2 only began being available to ship within 24 hours in the Apple Store at the beginning of August, nearly five months after its initial release. As for competitors, it could mean they have even more trouble finding adequate supplies to build iPad competitors at reasonable prices.