Apple iPad 3 Could Face Supply Chain Issues

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Trefis) -- Over the past few years, Apple ( AAPL) has encountered numerous raw material supply-related issues but has been able to overcome them.

Apple faced challenges last year such as the devastating earthquake in Japan labor and material supply issues in China, but it handled the problems deftly while other tech players such as Intel ( INTC), HP ( HPQ) and Dell ( DELL) suffered.

This time, according to a recent report from DigiTimes, there could be iPad 3 supply problems due to an insufficient supply of high resolution display screens, which are an integral of iPad 3. We discussed that issue in an earlier article.

See our complete analysis of Apple here.

According to a Bloomberg BusinessWeek article, Apple will continue to enjoy operational efficiency through upfront cash payments offered to its suppliers as "strategic weapons" to secure a significant advantage over its rivals. By managing its supply chain efficiently, Apple will be in a better position to negotiate its terms with suppliers.

Although Apple has managed all supply chain issues very well in the past, this time the company could suffer from a temporary blip in iPad 3 supply as reported by DigiTimes. The current situation is different because the entire supply chain has failed to substantially ramp up the supply of high resolution display panels.

However, we are not overly concerned about this temporary blip as the iPad accounts for only about 13% of our $550 price estimate for Apple stock . Our price estimate is largely in line with the current market price.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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