iPad 2 Components May be in Short Supply
With the iPad 2 still in short supply, the ongoing tragedy in Japan may further limit Apple's capability to churn out iPads and sufficiently meet demand. Looking at the iPad 2, Andrew Rassweiler of iSuppli identified five component parts sourced from Japan (NAND flash, DRAM, an electronic compass, the touch screen overlay glass and the battery), a few of which Apple may have trouble replacing from other sources.
While Apple could acquire the iPad 2s NAND flash memory and DRAM from other sources such as Samsung and Micron, the iPad 2's glass, battery, and compass, are not as easily replaceable.
While the iPad 2 battery pack is assembled in China, the iPad 2 battery itself is manufactured in Apple's Japanese factories. The iPad 2 battery is exceptionally thin and may very well require "advanced battery cell manufacturing technologies that reside in Japan." Compounding matters is that logistical hurdles in Japan may further frustrate Apple's efforts in obtaining the battery in the first place.
Another potential issue is the iPad 2 glass display. Teardowns of Apple's next-gen tablet show that the iPad 2 display is much thinner than its predecessor and that it may use Dragontrail technology that can only be supplied by Asahi Glass Co, a company that reported damage at two of its three manufacturing facilities.
It's important to bear in mind, though, that Apple tends to purchase component parts in bulk as part of long-term contracts where Apple prepays for plentiful supply. That said, Apple may have a bit of a buffer before supply really becomes an issue. And because of Apple's strategy of securing component contracts far in advance, the company may be better equipped to weather the storm than some of its competitors.
Moving along, Apple may also run into supply issues with regards to compasses.
Compasses are available from other sources including Yamaha, Aichi Steel, Alps and STMicroelectronics. However, these components are not easily replaceable The calibration of electronic compasses is tricky for a number of reasons," said Jérémie Bouchaud, director and principal analyst for MEMS and sensors at IHS. "Compasses are sensitive to electromagnetic interference. Furthermore, the iPad 2's compass works in close coordination with the tablet's accelerometer and gyroscope. This makes it impossible to simply replace one manufacturer's compass with another."
Broadly speaking, the report relays that even companies that have remained operational in the wake of the earthquake and tsunami may still be affected by logistical issues such as acquiring raw materials, employee absences due to transportation difficulties, and "interruptions in the electricity supply, which can have a major impact on delicate processes, such as semiconductor lithography." Moreover, semiconductor facilities that have put a halt on manufacturing will not be able to start up again until aftershocks are no longer an issue as the equipment is programmed to shut down every time an earthquake registers a 5 or higher on the richter scale.
For the time being, Apple manufacturing parter Foxconn has indicated that it has a few week supply of all the components needed for iPad assembly. Going forward, though, those components may become harder and harder to come by.