A Tuesday report by Reuters sourced from a note by MF Global FXA Securities asserted a billion dollar Apple investment in Sharp, allegedly to secure steady supply of displays for iOS devices. However, Asian supply chain is questioning the story, asserting instead that Apple is “working out a deal with Sharp” involving  a pre-payment to secure display supply for the iPad tablet. If true, Chimei Innolux, a Foxconn subsidiary, will see difficulties becoming a regular LCD panel supplier for iPad. Chimei was shooting for a million 9.7-inch iPad panels a month. Potentially the biggest loser? Samsung, .

Tighter collaboration between Apple and Sharp means that the US vendor might rely less on Samsung, as well as CMI, which has just begun supplying IPS panels for the iPad 2, the observers said.

Granted, Samsung is *not* the prime supplier of iPad displays (LG Displays is), but Apple potentially reducing its reliance on a frenemy – if anything – is a telling sign. On the other hand, it could also be business as usual as Apple normally does not put all eggs in one basket, especially amid the alleged quality issues with LG Display’s panels. Let’s not forget that Apple last month swapped LG for Samsung display drivers in iPad 2s.

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