Chinese iPad Clones Use Displays Rejected by Apple

Chinese vendors are reportedly purchasing 9.7-inch IPS panels that have fallen short of Apple’s quality requirements, and are then using these panels to manufacture iPad clones, Apple Insider reports.

LG and Samsung are Apple’s main panel suppliers; the two companies shipped 12-15 million 9.7-inch IPS panels to Apple in Q2, but only 7-9 million iPad 2 units are expected to be rolled out to the market in the same timeframe.

Some of the 4-5 million extra panel units are discarded due to low quality, some are sent to Foxconn for increased Q3 shipments, and others are purchased by white-box Chinese vendors.

Apple’s hunger for touch panels is well-known since the company buys 60% of the world’s touch panel production, analysts say. Apparently, Apple is controlling panel shipments as well as depleting the stock of panel manufacturers, which means that there are no panels left for other tablet manufacturers to buy. For example, it has been reported that Amazon cannot import enough display units from Asian manufacturers since they are currently using all their production capacity to satisfy Apple’s hunger for touch panels.

Despite the iPad clone invasion, the real iPad 2 remains extremely popular in China. Apple is planning to open its fifth store in the country by the end of 2011.