As you pointed out, manufacturers can still add more personnel, add more machinery, build a new plant; however, the later two are not quick solutions. They may take more than a few months. Building a new plant for example can take up to a year depending on conditions. Adding personnel is the quickest but it still takes time to train personnel.

As the article stated, Apple has locked in a certain a number of units through contracts already. Those manufacturers if at full capacity may not have an easy time increasing capacity. Thus Apple has locked down 60% of the market. This isn’t the first time Apple has done this. They locked down their supply of Flash RAM in a similar fashion. And Apple isn’t the only company to hedge their bets by buying a supply years in advance. Southwest Airlines made a great deal of profit by buying their jet fuel years in advance.

@Kamoku

I agree – regarding “knowing” the numbers of capacity in which the Fab(s) can manufacture and in what timeframe. Plus the percentage of failure in the parts coming down the production line… Apple has these non-disclosed numbers because they have been purchasing the maximum amount for these touch screens starting with their iphones & ipods. The sizes are different for their iPads however, they can easily project the scale of what has been produces in the past to what can be done for them in the future, Especially if Apple are the ones who’s building (or at least investing into) the future Fabrication facility.

There are many ways in which increased output can be achieved quickly without building another manufacturing plant–increased work force, added machinery to current plant, new techniques that increase production, etc. Most companies have expansion built into their current production environments. To do otherwise would be very short sited.

Therefore determining a maximum global production capacity is generally a guess based on current production levels as you state in your second paragraph. This is also why we see shortages that last for only a few months because, companies can adapt quickly to demand.

Furthermore, if Apple did purchase a percentage of production all the manufacturer has to do is increase that production and Apple would have excess stock and be on the hook for the cost. Apple is NOT that stupid, no company is. That is why they purchase a quantity and not a percentage of overall production.

The analysis of the original article is only trying to stir hype, typical Apple hype, by making things sound other than they are. This is nothing more than standard practice for companies, especially large companies. They purchase large quantities and companies then adjust their overall production to compensate, it is NOT a percentage of the overall market. Percentages in articles like this are only used to stir hype–Apple will sell 60% of all capacitive touch devices in 2011, etc. . . which isn’t even close to accurate.

The analysis should simply state, Apple is spending $7.9 billion on x, y, and z.

Now the part that leads to skepticism is that the writer of the article assumes he knows about the capacity of every single facility that is capable of producing the touch panel supply mentioned at the beginning. Additionally, I doubt that all of these facilities would be willing to release information about whether Apple has secured any of its production capacity. Without all of those numbers confirmed, 60% is just a guess.

Now the part that leads to skepticism is that the writer of the article assumes he knows about the capacity of every single facility that is capable of producing the touch panel supply mentioned at the beginning. Additionally, I doubt that all of these facilities would be willing to release information about whether Apple has secured any of its production capacity. Without all of those numbers confirmed, 60% is just a guess.

It would be nice if some of the tech writers would get a clue and think a little before regurgitating these ridiculous stories.