Analyst Shaw Wu for Kaufman Brothers has stated in a report to clients some potential reason why Apple’s iMac desktop computer has yet to be updated.

“We wanted to give an update on the Mac business from what we are picking up from our latest supply chain checks,” writes Wu in the note released Monday. “While new the iMac appears to be almost ready for primetime, what is holding it up appears to be business reasons and a potential small technical hurdle.”

According to Wu’s supply chain checks Apple is:

  • Undecided on whether to use a quad-core processor or new higher powered dual-core processors. Wu noted that “While quad-core would provide a material improvement in performance and potentially jump start sales,” adding, “it could cannibalize the Mac Pro, its high-end tower.”
  • Looking into whether the iMac’s cooling systems require redesigning “to deal with higher heat dissipation.”
  • Delaying the release of the iMac due to the time of Snow Leopard. “While Leopard would take advantage of multiple cores, Snow Leopard takes it to the next level with better support for multi-core, multi-processors, and OpenCL, with enhanced graphics capability,” Wu wrote.

Wu retain his AAPL price target of $120.