Markets: News  

Apple supply chain points to 8-inch iPad

TAIPEI (MarketWatch) -- Apple Inc.'s component suppliers in Asia are preparing for mass production in September of a new tablet computer with a smaller screen, people familiar with the situation said, suggesting that the Cupertino, Calif., company is close to launching a smaller tablet.

Two of the people said the new tablet will likely come with a screen smaller than 8 inches, compared with the 9.7-inch screen of Apple's (AAPL) latest version of the iPad, which was released in March. The iPad's screen size has remained the same since the first model was released in 2010.

The Wall Street Journal first reported in February that Apple was testing a smaller tablet, though people familiar with the situation said at the time that the company hadn't decided whether to proceed with the device.

Officials at Apple's component suppliers, who declined to be named, said this week that Apple has told them to prepare for mass production of the smaller tablet. One person said that Apple is working with screen makers including LG Display Co. of South Korea and Taiwan-based AU Optronics Co.

An Apple spokesman in California didn't respond to an email inquiry. A China-based Apple spokeswoman couldn't be reached by phone and didn't respond to an email inquiry.

Apple's plans for a smaller tablet come as the iPad faces new challenges in an increasingly crowded market. Apple's competitors include Samsung Electronics Co. and Amazon.Com Inc. (AMZN) , while Microsoft Corp. and Google Inc. recently unveiled tablet devices.

Analysts said a smaller tablet could help Apple maintain its dominant share of the tablet market at a time when competition is intensifying. Last year, the iPad held a 62% share of the worldwide tablet market, according to market research firm IHS iSuppli.

As the market for tablets continues to expand, consumers have more options in terms of size, technological specifications and price. IHS iSuppli expects worldwide tablet sales to surge 85% this year to 126.6 million units.

Last week, Google (GOOG) started taking orders for a tablet device with a 7-inch screen. Google is selling the Nexus 7 tablet for $199, the same as Amazon's Kindle Fire, which came out last year and also has a 7-inch screen.

Microsoft's (MSFT) new Surface tablet, which is expected to debut this fall, has a 10.6-inch display, larger than the iPad. Microsoft's Windows Chief Steve Sinofsky said that the Surface will be "priced like comparable tablets."