New Technology, New Problems
On Wednesday we noted that Apple had announced a new 12.9” iPad Pro model using mini-LED backlighting. With expected demand for the new product, which is expected to be released in May, of ~5m units, Apple has set up a supply chain to produce the newly configured backlights. This supply chain is also involved in Apple’s mini/micro-LED development project in Taiwan, which is based on mini-LED chips produced by Ennostar (3714.TT) (formerly Epistar), and involves a number of Taiwanese and South Korean companies. Once the chips are produced at Epistar, they are sent to both TSMT (6278.TT) and Yenrich (pvt) a subsidiary of Ennostar, where they are mounted directly on to PCB boards via SMT (surface –mounting technology), rather than more typical thru-hole mounting.
Given the size of the mini-LEDs relative to more standard size LEDs, surface mounting is the logical technology, especially given the number of LEDs, which in this case is over 10,000. That said, moving and mounting such small LEDs is a daunting task that carries with it inherently lower yields, and the removal and replacement of those mini-LEDs damaged in the process is a chore that adds to both the cost and the average production time. It has been said that TSMT has been plagued with low yields that have been a cause for potential short supply or extended delivery times for the iPad Pro, and reports that much of the SMT work has been shifted to Yenrich until the TSMT yields can be improved.
The flexible PCB that is the substrate for the mini-LEDs is produced by South Korean supplier Young Poong Electronics (000670.KS) and LG Display (LPL) and Sharp (6753.JP) are supplying the display, with GIS (6456.TT) supplying touch components and Heesung Electronics (pvt) assembling the modules. While there are bound to be glitches in the new supply chain, we expect it will have little overall difference on how successful the 12.9” iPad Pro is in the long run, and we expect initial reviews to be positive, which we expect will be the case based on both the M1 chip and the new display. All in, we would expect most iPad Pro users that are ready to replace older machines, will wait an extra month or so if necessary.
Given the size of the mini-LEDs relative to more standard size LEDs, surface mounting is the logical technology, especially given the number of LEDs, which in this case is over 10,000. That said, moving and mounting such small LEDs is a daunting task that carries with it inherently lower yields, and the removal and replacement of those mini-LEDs damaged in the process is a chore that adds to both the cost and the average production time. It has been said that TSMT has been plagued with low yields that have been a cause for potential short supply or extended delivery times for the iPad Pro, and reports that much of the SMT work has been shifted to Yenrich until the TSMT yields can be improved.
The flexible PCB that is the substrate for the mini-LEDs is produced by South Korean supplier Young Poong Electronics (000670.KS) and LG Display (LPL) and Sharp (6753.JP) are supplying the display, with GIS (6456.TT) supplying touch components and Heesung Electronics (pvt) assembling the modules. While there are bound to be glitches in the new supply chain, we expect it will have little overall difference on how successful the 12.9” iPad Pro is in the long run, and we expect initial reviews to be positive, which we expect will be the case based on both the M1 chip and the new display. All in, we would expect most iPad Pro users that are ready to replace older machines, will wait an extra month or so if necessary.
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