Monday, May 23, 2011, 05:10 am PT (08:10 am ET)
Foxconn explosion won't greatly affect iPad 2 production for AppleAn explosion last week at an iPad 2 production plant in Chengdu, China, is not expected to have a major impact on Apple, as less than 20 percent of production volume is said to have come from the plant.
Analyst Maynard Um with UBS Investment Research said in a note to investors on Monday that the Chengdu plant is considered a secondary location for iPad 2 production by Foxconn. He said checks with supply chain sources indicated that less than 20 percent of iPad volume comes from the Chengdu facility.
"Although the issue is unlikely to help supply issues to meet strong global demand, we see this issue as temporary and note there are few companies in our coverage that have as strong an end demand picture," Um wrote.
Supporting that same notion on Monday was DigiTimes, which also downplayed the impact of last week's explosion on production capacity. That report claimed that less than 30 percent of total iPad production came from the Chengdu plant.
And China Times (via Google Translate) reported on Sunday that Terry Gou, chairman of Foxconn, met with key suppliers following the disaster to ensure that it would not lead to production issues. Gou reportedly said that the explosion will not affect iPad 2 production, nor "new products" like the next-generation iPhone.
The death toll from last week's explosion now stands at three, while 15 people were injured in the incident that occurred on Friday. The explosion occurred in a Foxconn "polishing plant" around 7 p.m., and the Chengdu Municipal government said foul play was not involved.
Foxconn issued a statement on the incident to say that it is fully cooperating with an ongoing police investigation, and that production has been suspended at the facility. Apple also commented on the matter, stating that the company is "deeply saddened" by the tragedy, and that it is working with Foxconn to investigate.
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