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Apple iPad 2 Production Could Hamper Amazon Growth

We suggested a while back that Apple could smother the competition simply by demanding so much from its production partners that they'd have no other choice than to refuse or drastically reduce business from elsewhere in order to comply with Apple's production requests.

Digitimes reports that Amazon has been holding talks with Wintek, HannStar Display and J Touch over the delivery of screens for the company's tablets.

The article says that Wintek said that production schedule would become tight in the second half of the year while TPK, another display manufacturer mentioned in the article, was "reluctant to make a commitment to supplying touch panels to Amazon on concerns of capacity."

Apple consumes as much as 60 per cent of the touch panel capacity production spread over the 9.7-inch Apple iPad tablets and the 3.5-inch iPhone and iPod Touch devices.

The company also offers upfront cash payments in order to secure any production capacity thereby shutting the door on any other players; this causes production costs for the other manufacturers to surge allowing Apple to enjoy even bigger margins.

Amazon is expected to sell around four million tablets by the end of the year, less than a tenth of what the iPad 2 is expected to achieve and is also rumoured to have secured Quanta Computer as the tablet's ODM.