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Shortages of Components and Labor Affecting iPhone and iPad Production?


In a pair of reports today, DigiTimes claims that Apple's manufacturing partner Foxconn is experiencing shortages of both labor and component supplies required for iPhone and iPad production, with Apple also being among the companies still scrambling to secure component supplies in the face of increasing supply chain tightness resulting from the Japanese earthquake that has seen suppliers nearly run through any cushion they may have had.
Taiwan-based electronics manufacturing service (EMS) provider Foxconn Electronics (Hon Hai Precision Industry) is reportedly facing a shortage of both labor and materials at its plants in Chengdu, China, which is likely to affect shipments of iPad 2 and iPhone 4 orders in the second quarter, according to sources from upstream component makers.
According to the reports, Foxconn had planned 52 iPad production lines at its Chengdu plants capable of pumping out a total of at least 40 million units per year, but the component shortages and labor issues have meant that the manufacturer is falling short of Apple's current demands for 2.5-3 million units per month.

The component shortages stemming from the effects of the Japanese earthquake and the resulting country-wide power issues are said to have led to electronics manufacturers seeking to stockpile existing supplies of components while attempting to play down those moves lest suppliers realize the extent of the shortages and increase prices.
The sources pointed out that PC- and smartphone-related players have all claimed to have not seen any supply issues after the earthquake because of concerns that it might cause upstream players to panic and even raise their product prices, while trying to prevent the subject from impacting their new product launches. However, most of these makers have all been working on stocking their component inventory behind the scenes, the sources added.

The sources noted that several component suppliers are already close to having shortages with the real challenge expected to hit in June. The shortage crisis is also expected to bring issues such as rising costs and an increased rate of defective products in the future.
Apple shipped 4.69 million iPads during the first quarter of 2011, well below what most observers were expecting. The shortfall was reportedly due to the production transition from the original iPad to the iPad 2, with several technical challenges including light leakage on displays from LG and speaker production issues also affecting shipments.

Related roundups: iPhone 5c, iPhone 5s, iPhone 6, iPad Air

Top Rated Comments

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38 months ago
Maybe Apple should open up a factory in the US. Plenty of unemployment over here!
Rating: 6 Positives
38 months ago

Maybe Apple should open up a factory in the US. Plenty of unemployment over here!


+1

Id love Apple to be a positive example of American made electronics. Id definitely feel more at ease to paying their higher prices, if so.
Rating: 4 Positives
38 months ago

Maybe Apple should open up a factory in the US. Plenty of unemployment over here!


Good idea, won't happen though (sadly) :(
Rating: 3 Positives
38 months ago

+1

Id love Apple to be a positive example of American made electronics. Id definitely feel more at ease to paying their higher prices, if so.


1) For the ipad you are not paying higher prices. Competitors are struggling to match the ipad's price and feature ratio.

2) That would not solve the availability of components. It's a shortage

3) All products would become more expensive if produced in the US.
Even when people say, I would pay more, they usually don't!

4) This discussion was already held in other threads. Many of the US laws are not conducive to building factories here.
By the time a State or area would be done with just the environmental review other countries built the plant already.
Add capital gains taxes, unions etc. etc. and you'll know why these plants are not here.

5) The type of labor the assembly of millions of pieces requires is not available in the US. (See Cato Institute studies)
The higher education workers will not do these jobs. The lower education workers we don't want near these jobs.
The majority of manual labor is almost in the hands of the hispanic community, who do this well.
(On a sarcastic note, ask an American worker to lift a few heavy boxes and they'll call OSHA to have it automated or pass a regulation)

"Buy American or produce American" is a patriotic phantasy and doesn't account for the fact that Americans have many jobs in importing and exporting, as well as work internationally. If all the countries would isolate themselves only doing "home based" production, innovation would stifle and we'd go backwards.

The concept of FREE enterprise should apply to everybody all over the world.

The business world is now heavily integrated and in the very end it's all about money and profits and share prices.

Nobody pays anybody for being "nice" and giving jobs!

Reality hurts:-)
Rating: 3 Positives
38 months ago

Respectfully, I dont think so. Apple already has very high profit margins...more so than most competition. That 30% profit margin could be lessoned to facilitate American made goods and the additional cost associated with them. All that said, Im not coming from this with a financial argument, more so a moral one. I think it would be wonderful if Apple made the decision to support more American jobs (not that they dont provide many currently).


I'm not sure why it's a moral argument. Disclaimer, I'm a jingoistic pro-American extreme right wing nutjob. I want America to succeed - but I want that to happen because we're the best and have created the true advantageous position through merit and not trickery.

That said, I don't understand why I should want someone in China to be unemployed just so an American can have a job. They're human beings with families to feed. I also don't necessarily want my children to toil away in a factory. I feel bad for the Chinese that have to.
Rating: 2 Positives
38 months ago

+1

Id love Apple to be a positive example of American made electronics. Id definitely feel more at ease to paying their higher prices, if so.


only prices would be much higher... probably $2000 for the base iPad...
Rating: 2 Positives
38 months ago

only prices would be much higher... probably $2000 for the base iPad...


Thats BS. Ok American workers cost more. How about NON UNIONIZED workers. That would cut costs. Also I am sure the US Government would throw Apple a bone to move manufacturing to the US (not California of course since all of the Industrial restrictions would kill Apple.)
Rating: 2 Positives
38 months ago
Japan was a serious disaster .. what do we expect to happen? Apple is doing good with getting the products out in a timely fashion, the people who help manufacture the components are still in recovery and will be for awhile.

So what if you wait a few weeks for a device.
Rating: 2 Positives
38 months ago
Time to start stockpiling iPad 2? :p lol
Rating: 1 Positives
38 months ago

Just move all of the manufacturing to Texas, let's call it a day!


Ummm, they are probably looking for skilled, motivated, and slightly educated workers. Plus, it will be hard for people with fat fingers and big guts to assemble such elegant and precise devices.
Rating: 1 Positives

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