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Friday, April 22, 2011, 05:45 am PT (08:45 am ET)

2011 iPad shipment forecast cut to 40M as Apple faces 'the mother of all backlogs'

Apple's struggles to meet demand for the iPad 2 in the second quarter of fiscal 2011 were allegedly due to production problems and quality concerns with components, including LCD panels and speakers. That has prompted one research firm to cut its 2011 sales forecast by 4 million units, to 39.7 million.

Last October, iSuppli had increased its forecast for 2011 iPad shipments to 43.7 million units. That change came after Apple announced sales of 4.19 million iPads in its September quarter, a number that was seen as disappointing to some on Wall Street.

But while some analysts were prompted to rethink their sales projections going forward, iSuppli, at the time, increased its forecast, citing improved component availability would allow Apple to meet demand in 2011.

The launch of the iPad 2 resulted in crushing demand, and again Wall Street became optimistic about sales.

But during his company's quarterly earnings conference call on Wednesday, Apple Chief Operating Officer Tim Cook referred to struggles to keep up with demand for the iPad 2 as "the mother of all backlogs." Wall Street watchers had expected Apple to report sales of about 6.2 million iPads, but supply constraints led to sales of 4.69 million units.

As noted by DigiTimes, because iPad 2 supply "fell far short of demand" in the previous quarter, iSuppli has revised its 2011 sales forecast to 39.7 million units, down from the previous prediction of 43.7 million units. The new expectations are a result of Apple's inability to meet demand, rather than consumer interest in the iPad 2.

Specifically, iSuppli cited supply chain sources who indicated that Apple had quality concerns with LCD panels, production shortages of the new speaker found in the iPad 2, and lamination issues with one of its touch panel suppliers. And while Apple is said to be on track to "significantly increase its production volume" in the current quarter, it is said to be "still falling substantially short of its target production goal for April."

For 2012, iSuppli has actually increased its forecast for iPad shipments. It sees Apple shipping 62.6 million units next year, up from its previous prediction of 61.6 million.

The report also reiterated Apple's insistence that the earthquake and tsunami disaster in Japan has not had a major impact on supplies. And it also reaffirmed that Apple has been willing to agree to higher prices for components in order to boost iPad 2 production.

Analyst Ming-Chi Kuo said this week that Apple's iPad 2 shipments are expected to double in the company's third fiscal quarter of 2011. He said Apple expects to increase iPad 2 shipments by over 100 percent sequentially in the current three-month frame.

iPad 2


Cook said on Wednesday that he is "extremely pleased" with progress ramping assembly of the iPad 2. He also revealed that Apple will launch the device in 13 more countries next week. He also said he is confident that his company will produce "a very large number of iPads" in the quarter.

"Demand has been staggering, and I'm not going to predict when supply and demand will come into balance," he said. "I can only be confident on the supply side."