According to Morgon Stanley, it looks like production of iPad 2 supply would be delayed due to the explosion at Foxconn, Apple’s key part supplier. The fire occured in Foxconn technology’s factory in China’s southwestern city of Chengdu.
The iPad 2 assembly line in one of Foxconn’s Chengdu plant blew up last Friday resulting in three fatalities and wounding 15 others. Within two hours, the situation was brought well under control but productions have been stopped until a detailed investigation.
Foxconn is the name used by Taiwan’s Hon Hai Precision industry Co is the world’s biggest manufacturer of electronic product and has top clients like Del, in addition to Apple. According to the brokerage, the plant will be able to deal with the effect on supply now since Chengdu is not the primary site for the production of iPad 2. But the overall impact might squeeze the production and supply of iPads to an extent. The Chengdu production line was opened during the fourth quarter of 2010 and the estimated output was less than 400,000 units which is 30% less production from mid quarter till now. Most of the iPads are being made in Shenzhen, China.
After this incident Apple might consider spreading its source to minimize standstill on supply owing to one incident. Although the same incident might not happen again in the near future, Apple has to keep its alternate ready to fill in Hon Hai’s place.
Dealers said that the second source could be Taiwan’s Quanta Computer Inc. or Pegatron Corp., which at present are Apple’s suppliers. Quanta is the manufacturer of MacBook Laptops and Pegatron supplies Apple’s CDMA version of the iPhone.