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.
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
Taiwan will prioritize the development of silicon photonics by taking advantage of its strength in the semiconductor industry to build another shield to protect the local economy, National Development Council (NDC) Minister Paul Liu (劉鏡清) said yesterday. Speaking at a meeting of the legislature’s Economics Committee, Liu said Taiwan already has the artificial intelligence (AI) industry as a shield, after the semiconductor industry, to safeguard the country, and is looking at new unique fields to build more economic shields. While Taiwan will further strengthen its existing shields, over the longer term, the country is determined to focus on such potential segments as
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced