Apple’s $3.9B Investment Is Likley For iPad 3 Displays

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Phot: charamelody
Photo: charamelody

Apple last week was reticent to go beyond a “very strategic” component to describe how it plans to use a $3.9 billion payment to suppliers. However, now comes word the tech giant is giving suppliers marching orders to build high-resolution displays (2,048×1,536) for a future iPad.

“Apple has requested that manufacturers begin work on displays with that resolution for the iPad 3,” according to sources who spoke with an IDC analyst. The enhanced display will not be ready for the iPad 2, matching earlier reports about the updated tablet expected early this year.


However, despite the iPad 2 not offering the Retina display, the device will include more memory and disk space, along with being thinner, lighter and faster, according to the Monday report. IDC analyst Tom Mainelli believe’s Apple original iPad and the iPad 2 will control “the lion’s share” of a tablet market expected to reach 44.6 million units this year.

When Apple CEO Steve Jobs said back in October of 2010 that his company was looking for “strategic opportunities” for its $60 billion in cash, many observers jumped to the conclusion the tech giant would acquire companies. Last week, the other shoe dropped, leaving analysts redefining just what Jobs meant by a “strategic” use for its fat bankroll.

A portion of the money — $3.9 billion — has gone to ensuring Apple has a steady supply of a component the tech giant feels is “very strategic” to its future. “These payments consist of prepayments and capital for process equipment and tooling,” the company’s chief operating officer, Tim Cook told analysts during the earnings report. Although some saw the announcement akin to the Hunt brothers’ attempt to corner the world silver market, it apparently is nothing new for Apple.

In 2005, Apple bought 40 percent of Samsung Electronics’ flash memory supply during the holiday crunch, where everything from computers to digital cameras needed NAND memory. A few years later, Apple went back to Samsung a deal for iPhone memory, reducing the memory available to competitors. Prior to last week, Apple paid Toshiba $500,000 for memory.

If past deals with suppliers have revolved around the tight flash memory supply, many see this most recent strategic purchase involving Apple’s newest product, the iPad. All Cook will say is the pact is “similar to the flash agreements, they’re focused in that area we feel is very strategic.” That hasn’t prevented speculation, however.

Other possible components could be solid-state drives which appears headed for the new MacBook Air and other products. Another potential target for the $3.9 billion outlay is ensuring next-generation processors for its iPad and iPhone. All would ensure Apple can move forward while also checkmating any rivals’ attempts to match the Cupertino, Calif. company’s product roll-outs.

[All Things Digital, IDC, 9to5Mac]