Report Details iPad 2 Components Vulnerable to Shortages Following Japanese Earthquake

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IHS iSuppli today issued a report detailing five components of the iPad 2 that are sourced from Japanese suppliers, indicating that they could see shortages in the wake of the Japanese earthquake that has shut down a number of manufacturing facilities in the country.

The IHS iSuppli teardown analysis of the iPad 2 so far has been able to identify five parts sourced from Japanese suppliers: NAND flash from Toshiba Corp., dynamic random access memory (DRAM) made by Elpida Memory Inc., an electronic compass from AKM Semiconductor, the touch screen overlay glass likely from Asahi Glass Co. and the system battery from Apple Japan Inc.

There potentially are other components from Japan in the iPad 2, however, the teardown analysis process cannot always identify all components' countries of origin.

The report notes that some of those manufacturers remain in operation following the earthquake, but logistics issues, employee absences, and rolling blackouts as the country seeks to rebuild its infrastructure could still hamper production and delivery of the needed parts.

While NAND flash and DRAM can likely be sourced from other vendors, Apple may have more difficulty replacing any lost production of the compass and glass components of the device. And with the battery appearing to be a custom design produced by Apple's own Japanese arm, a backup supplier is likely not available at this time.

For its part, Apple's manufacturing partner Foxconn has indicated that it is not currently experiencing any component shortages for the devices it is assembling, with industry sources suggesting that Foxconn should still have a 2-3 week supply of needed components and is likely working to secure additional supplies, whether it be from the usual suppliers or through alternative means.

As there are rumors that Apple will soon be out of product supplies because Japan's earthquake has caused shortages of components are circulating in the IT industry, Foxconn Electronics (Hon Hai Precision Industry), which declined to comment on specific clients, reemphasized that the company will not see any component shortages in the short term, and said the company has already prepared backup suppliers. Even if component supplies do fall into shortage, Foxconn's capability of securing supply resources is still much better than its competitors, the company added. Market watchers also pointed out that Foxconn should still have about 2-3 weeks of component inventory left as IT players normally keep a certain level of inventory on hand for safety.

Apple's iPad 2 has seen significant demand, and the company has had difficulty keeping up with the flow of online orders and in-store lines. Shipping estimates for new online orders quickly slipped to 4-5 weeks, and even some of those who were among the first to place online orders last week have yet to see movement on their shipments. Meanwhile, availability at the company's retail stores has been extremely sparse, with only sporadic shipments arriving and even then containing only small supplies of select models.

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