Apple Inc could face a production loss of 500,000 iPad 2 tablets after the explosion at Foxconn Technology Group’s (富士康) plant in Chengdu, China, according to research firm IHS iSuppli.
The drop in manufacturing will depend on how long the plant is closed following the explosion on Friday, which killed three people and injured at least 15, iSuppli said.
The estimated production loss could rise further if the suspension of operations at the facility lasts longer than a month, iSuppli said.
Another Foxconn factory in Shenzhen that produces iPads might not be able to make up for the lost output, iSuppli said. The manufacturing breakdown could lead Apple to miss iSuppli’s forecast of 7.4 million iPad 2 shipments in the quarter ending in June, the research firm said.
Mike Abramsky, a technology analyst with RBC Capital Markets, speculated last week that the impact could be larger.
If Chengdu is where Apple’s iPads are mainly manufactured, instead of the Shenzhen factory, the blast could lead to lost production of 1.8 million to 2.8 million iPads, he said.
Abramsky had predicted 8 million iPad shipments during the period.
By contrast, Shaw Wu, an analyst with Sterne Agee in San Francisco, said in a report on Monday that the concerns were “overdone” and that production at other facilities was being ramped up to make up for the shortfalls.
He expects Apple to sell 6.8 million iPads in the quarter ending June.
In Taipei trading, Hon Hai Precision Industry Co (鴻海), which sells its products under the Foxconn brand, saw its share price rise 3 percent to NT$103 yesterday, following a 2.91 percent decline on Monday. The stock got a boost after the firm said it has a week of inventory, allowing it to continue operations as it completes safety checks following the Chengdu explosion.
“Knowing that production won’t be affected gave the market confidence today,” said Calvin Huang (黃文堯), an analyst at Daiwa Securities Group in Taipei, who rates Hon Hai “buy.”
“Previously, the company hadn’t said anything about the situation” regarding production and inventory, he said.
TLG Asset Management (台壽保投信) analyst Arch Shih (施博元) said Hon Hai’s dive on Monday was simply a knee jerk reaction to the explosion on fears that the company’s iPad 2 production for Apple would be seriously affected.
“But, after Apple remained resilient on Wall Street overnight, many investors seem relieved and started to think the impact from the explosion could be limited,” Shih said.
Goldman Sachs said it did not expect any material impact from the explosion as the plant in Chengdu was not the major production line for iPad 2.
Hon Hai is expected to continue to increase its supply to Apple, with possible adjustment of the production schedule, Goldman Sachs said.
EXPANDING: WT Microelectronics Co distributes more than 10,000 products to Asian countries, but hopes that acquiring Future Electronics will expand its global reach Semiconductor component distributor WT Microelectronics Co (文曄) plans to fully acquire Canadian rival Future Electronics Inc in a US$3.8 billion deal, the company said yesterday. If approved by regulators in Taiwan and abroad in the first half of next year, the transaction would be the largest since Micron Technology Inc absorbed DRAM chipmaker Inotera Memories Inc (華亞科技) for NT$132.6 billion in 2016. WT Microelectronics expects the deal to expand its reach to the US and European markets while broadening its product offerings and customer coverage, as both companies complement each other in terms of customer bases, product portfolios and geographical deployments, it
soft landing: The US’ rate-setting FOMC finds itself in a difficult situation as it seeks to address inflation through interest rate hikes while avoiding a recession The US Federal Reserve is widely expected to hold interest rates steady on Wednesday after a summer of mixed economic data, while leaving the door open to another hike if needed. The Fed has raised interest rates 11 times over the past 18 months, lifting its key lending rate to a level not seen for 22 years as it tackles inflation still stubbornly above its long-term target of 2 percent. Analysts and traders broadly expect the US central bank to hold rates steady on Wednesday in order to give policymakers more time to assess the health of the world’s largest economy. “We think
AI TREND: TSMC has been rapidly expanding capacity to meet a spike in demand for advanced packaging services, but still expects supplies to be tight for 18 months Arizona is in talks with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) about advanced chip packaging, state Governor Katie Hobbs said yesterday, which is crucial for the manufacturing of artificial intelligence (AI) chips. TSMC, which is building a US$40 billion chip factory in the US state, has not announced plans to build facilities for advanced chip packaging in the US. Advanced packaging processes stitch multiple chips together into a single device, lowering the added cost of more powerful computing. “Part of our efforts at building the semiconductor ecosystem is focusing on advanced packaging, so we have several things in the works around that
At a sprawling South Korean arms factory on Friday, a high-tech production line of robots and super-skilled workers were rapidly churning out weapons that could, eventually, play a role in Ukraine. Since the Russian invasion last year, the Hanwha Aerospace factory in the southern city of Changwon has expanded production capacity three times, workers told reporters, as South Korea ramps up arms exports while traditional behemoths like the US struggle with production shortages. Longstanding domestic policy bars Seoul from selling weapons into active conflicts, but even so it signed deals worth US$17.3 billion last year, including a US$12.7 billion agreement with NATO
RSS