Sharp failing to meet iPhone 5 deadline – report

Japanese electronics company Sharp has not yet started to mass produce screens for Apple’s next iPhone, even though its 12 days away from hitting the market, according to reports. The supplier’s credit rating was cut by S&P to ‘junk’.

The Japanese display maker’s output of screens has fallen due to high production costs, a source told Reuters on Friday, not specifying however how grave the underproduction is.

In early August Sharp President Takashi Okuda said his company would begin mass production and shipments from its Kameyama plant in central Japan which makes screens for Apple this month, though Reuters reports Sharp has declined to acknowledge that Apple is a customer.

Sharp reported heavy losses recently, and on Friday Standard & Poor's cut its credit rating on Sharp to junk status.

"Sharp's liquidity position has weakened, and the company is highly dependent on short-term borrowings in light of weak internal cash flow and a less favorable funding environment," S&P said in a statement. Earlier Sharp said it lost about $1.76 billion in the April-June quarter cautioning of a bigger-than-expected full-year loss.

However, Sharp is not the only source of screens for Apple’s products. The US tablet computer maker is also buying displays from Japan Display and South Korea's LG. The most anticipated premiere of the year may be on schedule and there will be enough devices in stores for eager customers.

The new iPhone screens will be thinner than those used by its predecessors – with the so-called in-cell panels, with the new technology eliminating the touch-screen layer found in current iPhones. The panels will extend 4 inches corner to corner, appearing 30% bigger than current iPhones, according to Reuters.

Sharp's shares lost 13% on Friday as uncertainty swirled around talks with Hon Hai Precision Industry for the Taiwanese company to buy a 9.9% stake in its fellow Apple supplier.