Apple’s iPad Puts Crunch on Netbooks as Suppliers Find Tablets More Profitable

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ipad screen

The iPad is already having an effect – real or perceived – on the netbook market. Although one retailer has backtracked on statements that the iPad is cutting into netbook demand, now comes word from manufacturers that they’d rather churn out more profitable tablets.

“The launch of Apple’s iPad has dampened the sales of netbooks, and with prices of netbooks dropping below costs amid decreasing shipments, panel makers would rather transfer their capacities to produce tablet PC panels as producing netbook panels means losing money,” industry publication Digitimes writes Friday.

As an example, Samsung Electronics in August produced 1.25 million 12-inch or smaller panels, up from 650,000 in May. LG Displays, the main supplier for Apple’s iPad, has also seen panel shipments increase, according to the publication. This isn’t the first sign of a growing iPad ‘halo’ for component manufacturers.

To reduce wait times due to production delays, Apple has made a concerted effort to expand its base of touchscreen suppliers. Along with its main supplier LG, the Cupertino, Calif. company inked a $240 million deal with Samsung for 3 million additional displays. The Taiwan-based Cando plant was also retooled to produce iPad touchscreens, adding 1 million more displays to the supply line.

Flash memory producers expect a 296 percent jump in demand for 2011, mainly because of the iPad. Because of the iPad and other tablets, the industry will produce 1.7 billion Gigabytes of flash memory next year, a steep rise from the 428GB used this year, analysts say.

“Tablets have stolen some cache from netbooks,” declares senior memory and storage analyst Michael Yang. Part of the reason for the iPad’s popularity is its use of NAND flash storage, rather than traditional hard disk drives.

[9to5Mac, Digitimes]