Shares of display panel builder AU Optronics (NYSE: AUO) are soaring today, jumping as much as 6% on reports that Apple (Nasdaq: AAPL) placed a massive order with the company. According to Taiwan's Economic Daily News, iPad production is hurting after the earthquake and tsunami in Japan, and Apple needs another screen supplier in order to overcome the problem. Samsung and LG Display (NYSE: LPL) are said to lose some 30 million unit orders to AU Optronics this year, at a massive price premium no less.

Here, have a sackful of salt.

There are many reasons why this rumor doesn't hold water:

  • AU Optronics doesn't have access to the LCD panel technology used in the iPad, and industry analysts say that it takes as much as six months just to sign a contract for the patents in question. Samsung obviously already cleared that hurdle, while LG is one of the core patent owners alongside Sharp and Hitachi (NYSE: HIT).
  • Let's say AU magically got the rights -- then it's time to convert production lines to a very different technology. That takes time too, and brand-new production facilities based on unfamiliar technologies aren't known for cranking out copious volumes of high-quality product from Day One. By the time AU gets its production lines up and running, supplies out of Japan may very well have normalized again.
  • So what if Apple just wants whatever panels AU Optronics can produce in its existing factories? Yeah, and I have this eight-mile bridge for sale in Arizona if you believe that one. HTC and Motorola Mobility (NYSE: MMI) may have switched to a different panel type when OLED screen supplies became a bottleneck for their high-end phones last year, but Steve Jobs still hasn't released the white iPhone 4 because the button in the front is the wrong shade of white and other factors which would prove trivial for other companies. It's Steve's way or the highway, even if customers have to wait longer for their iPads.

If there's any order shifting at all, it would be a redistribution between the existing suppliers or perhaps a helping hand from Sharp and Hitachi -- assuming that their factories in Japan are doing OK. So AU's jump today should be very temporary.

Make sure you catch the final outcome by adding AU Optronics and Apple to your Foolish watchlist.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Apple is a Motley Fool Stock Advisor recommendation. The Fool has written puts on Apple. Motley Fool Options has recommended a bull call spread position on Apple. The Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.