As if there was any doubt left that Apple (NASDAQ:AAPL) was preparing to launch an iPad Mini with Retina Display this year, IHS iSuppli tells CNET that suppliers are about to start shipping high-resolution panels in the third quarter. iSuppli director Sweta Dash believes that panel suppliers are still facing low production yields, and are struggling with meeting Apple's volume needs. Total panel shipments could be just 3 million throughout the quarter. NPD DisplaySearch analyst Richard Shim had similarly told CNET that mass production of the display panels would likely begin in June or July.
There have also been a handful of other rumors surrounding the Retina iPad Mini to consider. Apple may be trying to reduce its reliance on Samsung for components wherever possible, but that's easier said than done considering how large Samsung is in the component market. The South Korean conglomerate is expected to supply the 7.9-inch Retina panels, along with South Korean neighbor LG Display. Apple has been shifting more business to LG Display, which is now the Mac maker's top display panel provider.
DIGITIMES also reported today that contract manufacturer Pegatron is looking to start shipping Retina iPad Minis in August, while noting that component suppliers should start shipping ingredients in July. The Taiwanese publication also estimates that the smaller tablet comprised 12 million of the total 19.5 million iPads that Apple sold last quarter, showing how quickly the iPad Mini has come to dominate the product mix.
While the iPad Mini already carries a lower gross margin than Apple's corporate average, adding an expensive Retina Display could squeeze its profitability further unless Apple can offset the increases with lower component costs elsewhere. Apple has emphasized that it's willing to take these kinds of hits when it sees long-term opportunities, pointing to when the company released low-cost iPods years ago that put similar pressure on margins. Expanding the iPod family helped Apple maintain dominance in the MP3 player market.
Apple's tablet market share has begun to slip, partially as a function of how fast the market is growing. Combined with a redesigned full-sized iPad, a Retina iPad Mini will help Apple defend its tablet fortress.
Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple. The Motley 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. The Motley Fool has a disclosure policy.