The team at Panic tore into the cable after looking into performance issues for a current project. The accessory was encountering limited resolution, lag and MPEG artifacts.
Smartphones and tablets contain these system-on-a-chip processors for example, to stream video from an iOS device to Apple TV. Testing revealed that the Lightning adapter may not be able to support 1080p over HDMI.
Panic's speculation, posted on their blog states:
"All we can figure is that the small number of Lightning pins prevented them from doing raw HDMI period, and the elegance of the adapter trumped the need for traditional video out, so someone had to think seriously out the box. Or maybe they want to get as much functionality out of the iPad as possible to reduce cost and complexity."
Source: Apple Insider
Image credit: Panic Software