According to a report, Apple will be dropping longtime Taiwanese display supplier AU Optronics for their next generation iPad mini. The change is reportedly due to production issues of the low powered LCD screens.

Apple dropped AUO, a Taiwanese display supplier, from its list of suppliers for IPad mini 2. AUO had supplied LCD for iPad mini along with LG Display and Sharp, but could not secure orders from Apple since it had failed to develop an high penetration LCD for iPad Mini 2.

The report also claims that LG displays and Sharp are still on board given their ability to provide low power oxide semiconductor LCD panels. Samsung is rumored to be competing for AU Optronics share. In fact, Samsung has even developed an LCD sample for the next generation iPad mini and with Samsung Display and Apple's relationship improving, Samsung could be picking up the rest of the share.

Apple plans to apply oxide semiconductor LCD to iPad mini 2 despite the initial low production yield, because it gives the advantage of saving electricity. Last year, AUO started to supply panels to Apple thanks to its price competitiveness. However, it could not convince Apple, as it failed to meet the supply deadlines or to develop an LCD with high penetration rate. Also, the improved relationship between Samsung Display and Apple seems another factor for AOU being dropped.

Apple's next generation iPad mini has been the center of many rumors lately with some suggesting a retina model will not launch this year but rather in 2014 alongside a non retina model. Just yesterday KGI Securities analyst claimed there would be no iPad mini launch until 2014.