Too much of a good thing can be a very bad thing.

Camera chip designer OmniVision Technologies (Nasdaq: OVTI) will eviscerate its entire inventory of high-end sensor chips, according to DigiTimes. Apple (Nasdaq: AAPL) is the main culprit, as the gadget guru is building tons of iPhone 3GS handsetsfor the holidays. Netbooks and notebooks with built-in cameras add to the load, so we should probably point a little finger at Dell (Nasdaq: DELL), too -- the only laptop maker I know that uses OmniVision technology for sure.

Apple's manufacturing partners have ordered up to 20% more camera chips than they did last year, leaving OmniVision between a rock and a hard place. Being a fabless chip designer, the company depends on third-party chip foundrieslike Taiwan Semiconductor Manufacturing (NYSE: TSM) to crank out those chips.

TSMC is a giant and probably could produce enough chips to fill OmniVision's demands -- but OmniVision is a pretty small fish in a big pond. TSMC isn't likely to make bigger customers like Broadcom (Nasdaq: BRCM) or NVIDIA (Nasdaq: NVDA) wait just so OmniVision can keep its supply chain in order. "Your lack of preparation isn't my emergency," and all that.

This is good and bad for OmniVision. It's always nice to sell more product than expected, but OmniVision believes -- and I agree -- that "the ability to … produce and deliver reliable products in large quantities [in a timely manner] is a key competitive differentiator." The chips are manufactured in the Far East and then typically shipped out to Asian gadget manufacturing shops like Foxconn. Then the finished products need to be schlepped over the Pacific on a boat, which takes a long time.

And it's not like Dell and company can easily turn around and drop in a replacement chip from competitors like Samsung or Sony (NYSE: SNE), either -- we're not talking about commodity chipshere, but proprietary designs that are difficult to replace.

So OmniVision's reputation is on the line, which could be bad news for future orders. You don't design a gadget around chips you're not sure will be available when you need 'em. The shortage should be over by mid-November, but that's a tight squeeze in front of the holiday shopping season.

Did OmniVision just show off how popular its technologies have become, or did the company lose the trust of its customers? I'm a little verklempt -- talk amongst yourselves.

This article was originally published as Too Much iPhone Love Could Kill OmniVisionon Fool.com

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