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Cirrus Logic Experienced Production Problems With Components for Apple Device?


Dow Jones Newswires reports that Cirrus Logic, Apple's long-time supplier for audio chips in its iOS devices, has disclosed manufacturing issues with a new device, presumed to be an Apple product, that went into high-volume production last month.

Cirrus supplies analog chips for use in various energy and audio applications, most notably Apple devices such as the iPod and iPad. Apple makes up about half of Cirrus's revenue, helping the semiconductor company post strong sales and increased profitability in recent quarters as the popularity of Apple devices continued to rise.

But Cirrus late Thursday said it had determined an earlier test for a particular function of a new audio product--which analysts assume is for Apple--was insufficient to guarantee that all products met a certain standard. After a more rigorous test was developed, Cirrus found fewer working chips than previously expected, with that yield loss rising as volumes increased.

While Cirrus has reportedly addressed the issue without meaningfully impacting any device launch, the company has taken a charge against its earnings that will result in decreased gross margins reported for the first quarter of 2011.

Speculation suggests that the device in question may have been the iPad 2, which was in very short supply in the first few weeks of availability and has only recently begun to see shipping times and in-store availability improve. While demand for the iPad 2 has clearly been high, there have been claims that certain issues with components such as the device's display have slowed production and contributed to the shortages.

Analysts have, however, left open the possibility that the device experiencing issues could be an unreleased device, although one of the primary candidates, the fifth-generation iPhone, is not expected to be released in its usual June timeframe this year and appears to have not gone into production yet.

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