And worst of all, it has lost orders for 9.7″ iPad 2 displays to arch enemy, Samsung as well as Chimei Innolux (CMI), according to Digitimes.
The move could soon make the Galaxy Tab creators the largest maker of rival iPad 2 display panels, unless LG deals with the issue immediately.
LG Display, currently the largest supplier of iPad screens to Apple, fell one million units short of July panel shipments forecasts, say sources.
Figures suggest LG shipped just only 2.5-2.6 million units to Apple – a massive fall compared to expectations of around 4 million.
The panel maker had intended to up their monthly by 1 million to 4m before the production issues scuppered plans.
‘Quality issues’ with the iPad 2 panels associated with failing backlight units (BLUs) meant inventory failed to pass critical drop tests, thus supply was unable to keep up with Apple frantic demand, forcing it to suspend new orders, say DigiTimes sources.
This comes as iPad 2 users in March – just prior to its release here – reported leaking light from their displays, which were said to have been supplied by LG.
Samsung, who already makes components for Apple, one of their single biggest customers, is currently embroiled in a protracted legal battle surrounding patent rights for smartphones and tablets with Steve Jobs’ giant.
However, the report suggests Apple are keen not to source Samsung services any more than it absolutely needs to, although production imperatives may have to take precedent over patent cat fights.
Samsung almost doubled its iPad 2 panel output in July to 2 million as Apple scramble to deal with the shortage.
Although LG are said to be working on the problems, losing this lucrative contract with Apple would be a massive blow – and LGD’s revenues for third-quarter 2011 are likely to be hit, sources indicated.
CMI, whose major investor is Foxconn, already one of Apple biggest suppliers, is also bracing itself for a bumper order season – aiming for 1 million units – after having been certified as as an iPad 2 panel supplier in Q2.