Apple manufacturers: ARRGH, pesky iThings are impossible to make The iPad Mini is the latest Apple product to cause big problems for manufacturers in the Asian supply chain. According to reports, it's the LCD panels that are the problem, and both manufacturers - AU Optronics and LG Display - are losing money on the contract, Digitimes reports. AU Optronics and LG have struggled to produce …
And that's assuming both sides are communicating clearly.
Not a process engineer myself, just a fly on the wall during one dispute between an OEM supplier and the buyer. Being as I was working for the OEM at the time, I consider it a good thing we were both right about the engineering and able to win the argument. The point of contention was on how exactly to measure the temperature of media inside the device. Buyer was getting inconsistent results because they were simply dropping probes inside a chamber. Our process involved attaching the probes to both sides of the conduit in which the material was being heated and with that assembly being inside the chamber.* Since the key selling point was the stability of the temperature inside the conduit and not the box, ours was the better measure.
*OK, not exactly heated, but close enough for this posting. More than that might risk disclosure of parties, and/or breach legal agreements.
> ...is presumably manufacturing-speak for "we have to chuck most of them in the bin".
That is very precisely what "low yield rate" means, there is no secret shameful agenda behind that. Manufacturing processes are not perfect, there is ALWAYS some waste, i.e. some units don't pass the quality control. When most of the units pass the quality control you have a "high yield rate". When the process is too fiddly a lot of units end up in the bin and you have a "low yield rate". That increases costs. Chucking part of the production in the bin is an integral part of EVERY automated manufacturing process.
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Since Samsung doesn't even make the extra-thin type of display that Apple is using in the iPhone 5 and iPad mini, keeping Samsung around wouldn't have helped. The process used was jointly developed by Sharp and Apple, and has been licensed to LG and I think a third firm.
Not to say Samsung can't/won't develop something similar themselves, they just don't have it yet. Apple also wants to convert to the more power efficient IZGO LCD which is a Sharp invention, but they've had trouble getting that to production readiness so it likely won't appear in Apple stuff until 2013. It will probably appear in Android devices first given Apple's likely new product timelines.
I'd say rather than Apple's fight with Samsung it is far more likely Sharp's well-documented financial difficulties that are to blame here.
Well, wouldn't Samsung have been able to develop this screen far better than Sharp, given just the financial difficulties you've pointed out?
Apple got on their high horse about "innovating" and "stealing" other people's IP (even though Steve Jobs crowed in 1996 that they unashamedly "stole great ideas"...his words), and yanked their business away from Samsung. Now reality is beginning to cut through the "reality distortion field" that is part of the legacy of Steve Jobs: Apple's designs don't magically make a manufacturer a producer of cutting edge technology.
Apple said that they want other companies to be innovative, and yet it came out in court when they were sued by VirtnetX that Apple's engineers develop their products with no regard for what may be another company's IP. Innovation...sure...
I hope for Apple's sake that they learn this lesson here and now. They may have a fantastic share and brand value at the moment, but if they disappoint too many Apple customers in terms of both share and product one time too many, perhaps we'll find them burgeoning the market share of Android further.
Apple said that they want other companies to be innovative, and yet it came out in court when they were sued by VirtnetX that Apple's engineers develop their products with no regard for what may be another company's IP.
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ALL tech companies work this way. Apple, Samsung, Google, Microsoft, Cisco, IBM, and all the rest. If an engineer looks at someone else's patents and infringes, the company is liable for triple damages for willful infringement, versus just regular (1x) damages otherwise. Any engineer posting on El Reg will tell you they've been instructed to not look at patents anything remotely close to their field, and one friend of mine who works in Silicon Valley said he was told he shouldn't even READ any articles regarding tech patent disputes!
How do the new ones compare to the older ones when they were launched? If it's considerably more difficult now given current manufacturing state of the art than it was previously then I would assume that Apple is putting too much effort into making things less there. Minimalism has a limit when folks start talking about someone's new clothes. If those folks are investors, it ain't gunna be perty.
The manufacturers work on profit over the term of the initial contract, note that the article says they believe that they will start to turn a profit on the contract in Q1. The low yield rate at start up is usually calculated into the unit price over the term, in this case though it does sound like the yield is lower than expected and the manufacturers are taking a hit on the overall contract margin, but that's just the way the game works. They'll simply aim to increase the yield so that when they retain the contract the unit margin is vastly improved.
You only know the real cost of things you already make, and even at that, only based on past performance. Any time you introduce a new product, there are new processes, and possibly even new manufacturing equipment. Sure you can work with a sample in a test or model shop, and computers make it easier to try to emulate scaling processes, but until you actually make the first process run, you don't have any real data.
So pricing contracts for new stuff is an art that is informed by past experience. And if you can make improvements in the processing while the contract is ongoing, you can improve your profits. That's the part the business guys really count on when they write the contracts: that even if you take a hit at the start, your people are good enough to make up for it over the run of the contract.
Down-vote for "loosing".
"Usage: The verb lose is sometimes mistakenly written as loose, as in this would cause them to loose 20 to 50 per cent (correct form is … to lose 20 to 50 per cent). There is a word loose, but it is very different—normally an adjective, meaning ‘untethered; not held in place; detached’, as in loose cobbles; the handle was loose ; set loose."
It doesn't have the integrated digitiser electronics of the iPhone and is basically just a larger sized blank cut from the same process that they made the iPhone 3GS from. I'd take this report with a large pinch of salt (don't forget that Digitimes get the occasional fact right, but mostly spout rubbish).
"is basically just a larger sized blank cut from the same process..."
But this alone can affect yield rates, as seen in digial camera sensors. Full frame are much more expensive due to lower vield rates despite often being the same tech as smaller sensors.
An example:
Let's say the die from which your sensor is made has on average 4 defects in random places, which would render a sensor useless. If the sensor is small, you might get 100 out of each die. The 4 defects might (if you're lucky) affect only 1 sensor; they might affect 4 different ones. Yield rates are, on average, between 96-99%
For a large sensor, you might get 10 per die. Your 4 defects will still affect between 1 and 4 of your sensors, but this now represents 10-40% of the sensors on the die, lowering yield rates to an average of between 60-90%.
So although the difficulty to manufacture hasn't changed, the yield rates have declined dramatically.
The size of the blank makes a difference to yields, but not much on the scale of an LCD screen and the maturity of the process offsets this. Manufacturers will have known all the variables before they quoted for the job. The haters may hate this, but I'll say it again, the iPad mini screen isn't a complicated or advanced part. LCD panels are cut from sheets more than a meter long each side.
The screens for the iPad 3/4 and iPhone 5 are much more complex and newer processes. I can understand them having process issues, but these?
Its been pointed out that the iPad Mini ("every INCH an iPad"...well, yes...its made by Apple...and its a tablet...so it would be an iPad even if it had a two inch screen...marketing genius!) lacks basic functionality that other manufacturers include (http://www.theregister.co.uk/2012/10/25/ipad_mini_wifi_no_gps/), and had a surprisingly low resolution for a screen larger than that of their competitors in the small tablet market.
This seems to be Apple's way of guaranteeing recurring income: leave out features first time round, people will buy it cos of the Apple badge. Next time round unveil a very similar model with one or two more features, generate hype to the fanbois, the fanbois will hype it up out there, and charge more.
The cartoon depicting faithful Apple customers as a horde of zombies shuffling towards the light of a iStore seems more and more to reflect reality. Without hesitation I would rather have an Android device.
And the uplifted price is in preparation for the retina version so they can go... "wow, we've fit in an awesome post-HD screen in a 7.8" space and it's not anymore expensive".
Even if this is true or not, at least some co's are willing to push the boundaries unlike most of the Android-ducks sitting there.
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