The latest rumor attached to the iPhone 5 comes courtesy of prolific, yet seldom reliable DigiTimes, which has apparently heard that Apple is "likely to adopt in-cell touch panels rolled out by Sharp and Toshiba Mobile Display" for this year's model.
Despite DigiTimes' track record--they've been banging the iPad mini drum since mid-2010--they might be on to something here. So-called in-cell technology is already in use by Samsung in its Super Active-Matrix Organic LED (AMOLED) Galaxy Note and Nexus phones, so it doesn't seem too far-out that Apple would adopt it, too.
So, what's the benefit? In the current iPhone, there are actually three layers to the screen. The bottom layer is the LCD itself, followed by a layer of capacitive sensors and a piece of Gorilla Glass (and a bit of glue throughout). By building the capacitors inside the LCD itself, Apple could eliminate an extra layer (and perhaps shave the glass down), this making the new iPhone lighter and thinner than any of the previous models.
We're talking millimeters and grams, of course, but according to Phonemantra, the results are fairly significant: "When Toshiba first demonstrated these panels last year, it showcased pieces that were 7 inches with a resolution of 1024×600 pixels. Compared with current-gen products that require an external surface, the thickness of the in-cell touch panel was 43 percent thinner at 1 mm, and the weight was 48 percent lighter at 225 grams."
Also, since Apple would be eliminating the middle man, so to speak, taps and gestures could be even more responsive, particularly when dealing with tiny buttons and complex gestures (though you wouldn't know it by using the Galaxy Note, the Galaxy Nexus has been praised for its responsiveness).
The only possible downside is the cost. In-cell panels cost significantly more than on-cell ones, but if Apple didn't pass along the cost of the iPad's retina display, we certainly don't except to pay more for the iPhone 5.
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