iPad factory explosion kills three, could cost Apple 500,000 tablets

May 24, 2011
Finance

An explosion ripped through an iPad-producing factory Friday, killing three workers and injuring 15 more in Chengdu, China. Apple (AAPL) and Foxconn Technology Group, the owner of the factory, aren’t sure what caused the explosion, but the resulting plant closure could have a serious effect of iPad 2s around the world, according to a story […]

An explosion ripped through an iPad-producing factory Friday, killing three workers and injuring 15 more in Chengdu, China.

Apple (AAPL) and Foxconn Technology Group, the owner of the factory, aren’t sure what caused the explosion, but the resulting plant closure could have a serious effect of iPad 2s around the world, according to a story from Bloomberg. Already the plant has been forced to close, and isn’t expected to reopen for about a month.

That could mean a loss of 500,000 iPads for Apple during a time when the company is still struggling to meet orders and prices for the hot-selling device on auction sites such as eBay (EBAY) are still well above retail. The actual losses to Apple will depend on how long the factory remains closed, according to market research firm iSuppli.

Foxconn has another iPad factory in Shenzhen, China, but iSuppli notes it might not be able to carry the weight of two factories. That could lower Apple’s iPad 2 manufacturing count below the 7.4 million predicted by iSuppli as hitting stores by the end of June, and it could put a damper on supplies of the device in at least some areas.

Analysts seem divided over just how big an impact the explosion could have on Apple and the iPad, however. On the one hand, tech analyst Mike Abramsky of RBC Capital Markets thinks that if Chengdu was Apple’s primary iPad supply factory (rather than Shenzhen), the losses could stack up to 1.8 to 2.8 million iPads – falling well short of Abramsky’s 8 million expected iPad shipments by the end of the quarter.

READ  How to Set Up Apple and Google Pay

On the other hand is analyst Shaw Wu of Sterne Agee. A report he wrote today puts Apple at selling 6.8 million iPads by the end of June, and said iPad production is already being increased to cover Chengdu’s shortfall.

Apple’s latest iPad has been in high demand ever since it was announced back in March. Since then, preorders from Apple’s online retailer went unfilled for weeks because of high demand, and resellers made quite a few of the devices available on sites such as eBay to capitalize on the hype. Things have slowed down since then, with iPads showing up in Best Buy (BBY) and Target (TGT) stores as well as in Apple Stores and Apple’s online portal. But if the Chengdu supply losses are significant, it’s not crazy to assume iPads could be in short supply again as the summer wears on, potentially having an effect on Apple and its plans for the device as it goes into its Worldwide Developers Conference in June.

Search for more

Phil Hornshaw

Phil Hornshaw is a freelance writer, editor and author living in Los Angeles, dividing his time between playing video games, playing video games on his cell phone, and writing about playing video games. He’s also the co-author of So You Created a Wormhole: The Time Traveler’s Guide to Time Travel, which attempts to mix time travel pop culture with some semblance of science, as well as tips on the appropriate means of riding dinosaurs. Check out his profile.

    Home Apps Games