Sat, Apr 03, 2010 - Page 11 News List

Buildup to iPad launch shows supplier efficiency

SUPPLY AND DEMANDThe iPad is the offspring of a globalized economy where components and assembly are sourced to low-cost, high-speed manufacturers


The fevered buildup to today’s iPad launch has demonstrated the brute efficiency of the little-known Asian suppliers responsible for turning Apple’s design vision into reality.

Taiwanese touch-screen makers, South Korean chip producers and Chinese battery manufacturers have been adding workers by the hundred to staff extra factory shifts and meet double the forecast demand.

Along the way, the component makers have navigated technical hurdles posed by a product that Apple boasts will remake personal computing.

“iPad suppliers forecast eight to 10 million shipments in this calendar year, up from prior expectations of five-plus million,” Morgan Stanley analyst Katy Huberty said.

The iPad, like the iPhone and iPod before it, is the offspring of a globalized economy where components and assembly are sourced to low-cost, high-speed manufacturers.

Simplo Technology Co (新普) is Taiwanese, but makes components for Apple at its plant in Changshu, in China’s Jiangsu Province, and has recently shifted into overdrive to fulfill orders for iPad batteries.

Tapping China’s massive labor market, the plant’s “Apple Manufacturing Department” has added 700 workers since Lunar New Year and now employs 1,800 people.

“The product has a tight deadline, and we’ve been increasing staff numbers to make it,” said an executive at the department, giving her surname as Zhou. “The output of the iPad battery is now 50 percent higher than it was in January.”

As a rule, Apple’s Asian partners are loath to talk, bound by confidentiality agreements and Apple’s reluctance to allow outsiders a glimpse of its inner workings.

But in Taiwan alone, 20 enterprises are involved in making the iPad, said Jonathan Luo of the Topology Research Institute (拓墣產業研究所), a think tank in Taipei.

Millions of iPads will be assembled in China by Taiwan-based Foxconn (富士康), also known as the Hon Hai Group (鴻海集團), analysts and technology Web sites say.

Taiwan’s Catcher Technologies (可成企業) manufactures the device’s silver casing, Novatek Microelectronics makes LCD drivers, and Dynapack International makes batteries, Luo said.

South Korea’s Samsung is widely believed to have a hand in the super-fast processor that drives the iPad, along with lesser known chip foundries in Taiwan.

The multitude of suppliers is part of Apple’s strategy of having ample back-up mechanisms in place, ensuring delivery even when the unexpected happens.

One example is the production of the high-resolution touch-screen, new territory for Apple and its suppliers due to its 25cm size.

“Most of the components in the iPad are mature items,” said Mars Hsu, an analyst with Grand Cathay Securities (大華證券). “The only component that may have had production problems is the touch-screen.”

The main supplier has been TPK Touch Solution (宸鴻科技). But in a possible indication of technical obstacles, Apple appears to have switched at least some of its screen orders to Wintek Corp (勝華科技), Hsu said.

While customers are set to discover whether Apple’s hype is worth it, the iPad has shown what the global integrated economy can engineer in a short space of time.

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