Analyst: Foxconn Explosion Could Lead to iPad Shortages

Discussion in 'The Water Cooler' started by reghakr, May 22, 2011.

  1. reghakr

    reghakr Excellent Member

    Joined:
    Jan 26, 2009
    Messages:
    14,220
    Likes Received:
    180
    The tech world is abuzz again with worries about shortages of popular products, this time because of an explosion at a Chinese factory that killed two people.

    An industry analyst says Friday's horrific explosion at the Foxconn Chengdu plant will lead to shortages of Apple iPads. Foxconn Technology Group also makes Apple's iPhone and other consumer electronics for companies including Sony and Hewlett-Packard.

    The full impact of the disaster on manufacturing is not known. The Associated Press reports that a company official said a fire sparked by the explosion, which appears to have been caused by an accident in the plant's polishing workshop, had been quickly put out and that operations at the factory would not be affected.

    Still, some in the industry believe there could be manufacturing hiccups.

    Analyst Mike Abramsky of RBC Capital said in a research note that was picked up by several news organizations that the worst-case scenario is that iPad production will be reduced by 2.8 million units -- a drop of 36 percent for third-quarter production against an estimated production run of 8 million units. The best scenario is that production will be reduced by less than 1.3 million units as Foxconn makes repairs, according to Abramsky.

    There could be other long-term impacts, too. Industry observers have noted reports of poor working conditions at Foxconn.

    A string of worker suicides forced Foxconn to move to improve conditions at its plants last year.

    News of the explosion comes as Apple has recently completed international launches of the iPad 2, raising demand for the second-iteration of the popular tablet device. Apple is currently showing shipping times of up to two weeks for iPad 2 online orders.

    The explosion also comes on top of the impact from the Japanese earthquake. That disaster created a component shortage for tablet devices, affecting everything from glass screens to memory and power amplifiers, although there's no evidence this has affected production of Apple products.

    Time will tell whether Apple enthusiasts are swayed in their purchasing decisions by the developments abroad. The company is lucky this didn't happen during the holiday season, when there is a crush of people snapping up consumer electronics.

    The company's stock price slipped 1.6 percent following Friday's news. It's still trading near a 52-week high.

    Source: Analyst: Foxconn Explosion Could Lead to iPad Shortages | PCWorld
     
  2. reghakr

    reghakr Excellent Member

    Joined:
    Jan 26, 2009
    Messages:
    14,220
    Likes Received:
    180
    Plant closes following accident leaving three dead

    An explosion at the Foxconn factory in Chengdu China which resulted in three deaths and 15 injured is likely to put Apple's iPad 2 supply further in constraint.

    The explosion and fire at the plant, which a DigiTimes report said accounts for around 25-30 per cent of Apple's iPad 2 production volume, resulted in the closure of the planet while Foxconn cooperates with a police investigation.

    DigiTimes sources said that Foxconn intended to ramp up production at the Chengdu factory to three to four million iPad 2s in the second quarter, up from around 600,000 in the first. The growth of shipment capability at Chengdu was expected to climb much more quickly than the contract manufacturer's main Shenzhen site.

    Little is known about the explosion or if it was connected to pressure to rapidly expand production capacity amid continued constraint of iPad 2 supply.

    Source: Explosion at Foxconn plant is likely to impact iPad 2 supply | PC Retail Industry | PCR
     

Share This Page

Loading...