According to DigiTimes rumors several of the companies Apple relies on to produce display panels for the iPhone cannot generate enough of a profit from the new in-cell touch panels that are being used for the next iPhone. As a result, Apple's suppliers may not be able to ramp up production of these parts enough to meet the demands for the iPhone 5, which could delay shipments.
"Due to the poor yield rates, combined shipments of in-cell panels for the upcoming iPhone are estimated at only 4-5 million units in July - far below Apple's target of 20-25 million for all of the third quarter," DigiTimes reports.
Apple is apparently trying to fix this problem by offering its suppliers extra subsidies to lower the cost of producing the new in-cell touch panels, and thereby encouraging them to boost the supply of these parts. Alternatively, DigiTimes says Apple could choose to approach TPK, the panel supplier for the previous iPhones, and ask it to manufacture screens for the next iPhone, but that would mean abandoning the new in-cell touch panels.
The in-cell technology is a new component of the iPhone, which makes it possible to integrate the touch screen sensors directly into the LCD screen. This not only improves the screen's display quality, it also makes the phone thinner.
It seems unlikely that Apple would give up on this feature, but if Apple ends up being short several million iPhones as a result, this could lead to significant delays that potentially cause some customers think twice about buying the device.