“A new report out of Taipei today reports that Bank of America Merrill Lynch stated on Wednesday that Taiwan’s Hon Hai Precision Industry Co. may produce fewer units of Apple Inc.’s next-generation iPhone than expected in the coming months because of supply constraints faced by the device’s display,” Jack Purcher reports for Patently Apple.

“Merrill Lynch stated in its latest research note that ‘Hon Hai, which assembles iPhones and iPads for Apple, is expected to ship 5 million to 10 million iPhone 5s in the third quarter and 30 million to 40 million units in the fourth quarter,’” Purcher reports. “Some estimates for the highly anticipated phone have even reached 20 million units for the third quarter and 50 million to 60 million units for the fourth quarter, which Merrill Lynch saw as being too optimistic.”

Apparently, analyst Robert Cheng sees an issue in ramping in-cell display panels which he calls “by far the most critical component for the iPhone launch.”

Read more in the full article here.