How Thin Can the iPhone Go?

This just in: Thin is in.

In smartphones, a device's thickness, or lack thereof, is a headline feature in its own right. With Apple (Nasdaq: AAPL  ) reportedly now beginning production of its sixth-generation iPhone, how thin can it go?

Pretty darn thin
The Wall Street Journal is now reporting that the next iPhone's display and touchscreen will be even thinner than the last generation, thanks to advancements in integrating more components together. Screen suppliers including LG Display (NYSE: LPL  ) are allegedly producing thinner panels using what's called in-cell technology that integrates touch sensors directly into the LCD instead of requiring a separate layer.

The current iPhone 4 and iPhone 4S come in at just 9.3 millimeters thin, a solid 25% thinner than the previous iPhone 3G and iPhone 3GS models at 12.3 millimeters.

Source: Apple.

Source: Apple.

Switching to in-cell technology would help Apple shave off 0.5 millimeters, which may not sound like an awful lot but is necessary to compete with Google (Nasdaq: GOOG  ) Android rivals that are losing weight fast. For example, Samsung's Galaxy S III is down to 8.6 millimeters, and HTC's One X comes in at 8.9 millimeters. Google subsidiary Motorola's Droid RAZR is just 7.1 millimeters thick.

Many of these vendors (including all three smartphones just mentioned) are able to achieve this in part by using OLED screens, most of which are supplied by Samsung thanks to its partnership with Universal Display (Nasdaq: PANL  ) . Since OLED screens use organic materials that emit light when an electronic current is passed through them, it eliminates the need for a separate backlight and enables a thinner display. I still expect Apple to adopt OLED in the distant future, once the technology's costs come down and manufacturing yields increase, but for now it's sticking with LCDs.

Second and third opinions
DisplaySearch analyst Hiroshi Hayase says that switching to in-cell technology will also make for a higher-quality image along with reducing thickness, so there are multiple reasons to go for it.

KGI Securities analyst Ming-Chi Kuo, who has made numerous predictions on Apple that have turned out accurate in the past, is chiming in as well. Kuo thinks Apple will get the next iPhone to less than 8 millimeters, expecting a total reduction of approximately 1.4 millimeters. That would be a 15% reduction. Additional improvements would come from slimming down the battery and switching the back panel from glass to metal.

Source: MacRumors.

Source: MacRumors.

There are conflicting reports on how in-cell technology would affect the manufacturing process. The WSJ's sources say that the process is difficult and time-consuming as suppliers are working to improve yields. On the other hand, Kuo actually says the production should be simpler since it uses fewer steps. He even estimates that the switch would reduce production times from 12 to 16 days to an improved three to five days.

It's a small world
Reports that Apple is switching to in-cell surfaced as early as April, when Focus Taiwan reported that Taiwanese display makers were losing out to Japanese rivals that currently enjoy leads in the technology. Taiwanese players TPK Holding and Wintek, which currently supply touch-panel layers in current iPhones, would be cut out.

On the other hand, AU Optronics (NYSE: AUO  ) , also based in Taiwan, is supposedly one of the suppliers for the rumored iPad Mini 7.85-inch display, so display makers in the region aren't all losing out on Apple wins -- at least not until Apple makes the same switch to in-cell in iPads.

Thin is in
In the era of mobile computing, being thin corresponds directly with portability and mobility. Many details surrounding Apple products before their launch are shrouded in mystery, but I'll basically guarantee you one thing: a proud proclamation at the unveiling and subsequent marketing campaign that it will be "the thinnest iPhone we've ever made."

Apple's constant push to drive hardware innovation within its supply-chain partners is one reason it still has growth momentum. Sign up for The Motley Fool's brand-new premium research service all about Apple to read more.

Fool contributor Evan Niu owns shares of Apple and Universal Display, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Google, Apple, and Universal Display. Motley Fool newsletter services have recommended buying shares of Apple, Google, and Universal Display and creating a bull call spread position in Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

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