While Apple did set a new record during the iPhone 5 launch weekend, selling more than 5 million units, it could have sold more if supplies of the device has not been shorthanded. According to Bloomberg, this supply shortage is the result of the new ultra-thin in-cell display technology used in the new iPhone.
The in-cell display technology puts the touch sensors right into the display, rather than as a separate layer, making a much thinner iPhone. But this sounds a lot simpler than it actually is, and the screens themselves are much harder to make, leading to supply shortages.
Apple was originally using LG Display Co. and Japan Display Inc. to produce the new four-inch screens, but enlisted help from Sharp to ensure high production rates. However, Sharp has reportedly been struggling to produce enough screens to meet demand. According to Bloomberg, Sharp has struggled to reduce defects in the screens that use new in-cell technology and was unable to start shipments before the iPhone was announced.
While this seems to make a lot of sense, Apple hasn’t actually confirmed that this is the reason for any supply shortages, leaving much of this to speculation. Supply shortages could just be due to the 5 million units that were sold in the first three days the device was available, along with the 2 million pre-ordered in the first 24 hours it was available for pre-order.