Apple May Use Sharp Displays in IPhone, IPad

Apple will reportedly pay Sharp more than $1 billion to ensure a steady supply of displays for its iPads and iPhones, according to MF Global FXA Securities.

Apple's new investment would be the latest in the company's dealings with Sharp as it looks to solve its supply issues. Apple has reportedly already signed a contract to have Sharp supply new power-efficient screens that are set to debut in the sixth-generation iPhone next year.

While there have been no official reports, Apple may be dealing with supply shortages because of consumers' high demand for its products. CNET Asia this morning reported the release of the iPad 3, expected to come alongside the iPhone 5 later this year, had been pushed to next year due to a limited supply of screens.

While Apple had never officially announced the iPad 3, making reports of a delay just a rumor, the shortage in displays reportedly stemmed from Samsung and LG's inability to produce enough screens to meet Apple's demand.

Apple's move towards Sharp comes as the company remains embroiled in patent litigation lawsuits with long-time supplier Samsung. The two companies are still doing business with each other, but as their court battles heat up, so does speculation that Apple plans to ditch Samsung for another chip maker.

If Samsung loses Apple as a customer, it would leave a gaping hole in the Samsung's revenue stream. Apple last year spent $7.8 billion on Samsung's LCD screens, processors and flash memory. While it may be easy for Apple to find another supplier willing to take on $8 billion worth of work, it will be much more difficult for Samsung to find another customer ready to spend so much money.

Apple's pending deal with Sharp may end display supply issues for the company, but it also may be a telling sign of the state of its relationship with Samsung. Only time will tell if Sharp will join Samsung as an Apple supplier or be its replacement.