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TheStreet Open House

Apple iPhone Debut Nipped by Shortages

Stocks in this article: AAPL T VZ

CUPERTINO, Calif. ( TheStreet) -- Brace for a summer of Apple (AAPL - Get Report) iPhone shortages.

Supplies of Apple's iPhone will be far below the company's plan and most likely not sufficient enough to keep up with the presumably strong early consumer demand.

Apple's iPhone production has hit a speed bump due to display screen shortages, says Rodman Renshaw analyst Ashok Kumar, whose sources include Apple supply and manufacturing partners.

Kumar says the shortage has forced Apple's contract manufacturers to cut the iPhone's monthly production rate to 2 million a month, down from the planned rate of 4 million iPhones a month.

"Because production will be about half, a lot of demand will be left unsatiated," says Kumar.

The component shortage comes as demand for the new iPhone builds to record proportions. Apple said this week that pre-sales were running 10 times higher than previous levels for the iPhone 3GS.

Apple representatives were not immediately available for comment.

More on iPhone
Verizon iPhone Signs Send Apple Soaring

The hitch involves production of in plane switching displays, the key component of Apple's so-called retina display screens on the new iPhone. Kumar says people close to the production expect to have the issue resolved probably by August, and definitely by fall, which would be in time for the holiday sales rush.

Apple's new iPhone has been a roaring success already, as the crush of demand for pre-orders crashed AT&T (T - Get Report) Web processing systems this week.

Apple has twice had to delay the availability date for the new iPhone due to heavy demand and limited supply.

Investors have been particularly excited about the new iPhone and continued signs that a CDMA version of the phone may land at Verizon (VZ - Get Report) eventually. The prospects of a Verizon iPhone sent Apple shares to a new all-time high Thursday.

--Written by Scott Moritz in New York.

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