Analyst: Foxconn plant explosion to disrupt iPad 2 production

But temporary problems at Chinese facilities unlikely to affect Apple's bottom line

The explosion at a Chinese factory last week will affect production of Apple's iPad 2, but won't affect Apple's bottom line, a Wall Street analyst said today.

"It will definitely impact production, but this isn't something that will be material to Apple's earnings," said Brian White, an analyst with Ticonderoga Securities.

White, who supplied a research note to clients earlier Monday about the explosion and fire at a Hon Hai Precision Industry Co.-owned plant in Chengdu, China, said that iPad 2 manufacturing can probably be shifted elsewhere.

Taiwan-based Hon Hai, better known by its trade name of Foxconn, has shuttered not only the Chengdu facility, but the electronics polishing lines at all facilities to conduct investigations, according to the Wall Street Journal.

Hon Hai made the move after an explosion last Friday at the Chengdu plant killed three and injured 15.

Foxconn produces products for some of the world's biggest names in technology, including Apple and Hewlett-Packard.

White echoed the take of most other analysts, who said that disruptions in iPad 2 manufacturing would be temporary, and likely solved by workarounds.

"If this was the only plant where Hon Hai assembles iPads, it would be different," said White. "But they have still more production at Chengdu, as well as the Shenzhen facility. If all they need is an incremental capacity, this will not be something that materially affects Apple."

According to White's sources, although iPad 2 production was being shifted from Shenzhen to Chengdu in western China before the explosion, the former remains the primary location for Apple's tablet manufacturing.

Taiwan-based DigiTimes reported today that the affected plant produced between 25% and 30% of the iPad 2s shipped last month.

Apple has been unable to match iPad 2 supply with demand since it launched the tablet refresh in early March. Currently there is a one-to-two week delay between ordering an iPad 2 on Apple's online store and when the tablet is shipped to the customer.

While some reports had pegged that delay at a shorter three to five days just prior to the Friday explosion and fire, White didn't see the longer interval as an indication that Apple believes supplies will be even tighter.

"It may be a 'just in case' move on their part," said White. "If so, it's the smart thing to do."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer or subscribe to Gregg's RSS feed. His e-mail address is gkeizer@computerworld.com.

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags business issuesApplefoxconnhardware systemstablet PCslaptops

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Gregg Keizer

Computerworld (US)
Show Comments

Essentials

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?