Apple bearing the brunt of higher component costs from supply shortage in Japan

Thu, Mar 31, 2011

Finance, News

According to a new report from DigiTimes, Apple is absorbing an increase in component cost pricing in order to ensure smooth and uninterrupted delivery of parts necessary for iPhone and iPad production. The report notes that other tablet manufacturers, however, may not be as economically free as Apple to absorb increasing part costs, a fact which will only give Apple more of an advantage in the marketplace.

iPad 2 sales thus far have been beyond even the most bullish of analyst expectations. And though Apple has not yet released any official sales figures, ridiculously long lines at Apple Stores and unprecedented high demand all point to a blowout quarter for iPad 2 sales. The report notes that Apple iPad 2 shipments during the current quarter are expected to top out at 4 million units and that Apple’s suppliers currently have enough inventory on hand to last until May but may struggle to sustain that until June.

Following the catastrophe’s in Japan, there has been a lot of talk regarding the potential for supply shortages coming out of Japan. iSuppli two weeks ago identified 5 component parts Apple uses that are sourced in Japan (DRAM, NAND flash, the iPad’s electronic compass, the touch screen overlay glass, and the battery). Of these 5, the battery and glass appear to be the two items most subject to supply shortages.

While iPad 2s battery pack is assembled in China, it’s actually manufactured in Apple’s Japanese factories. And as for the glass, the iPad 2 is believed to make use of Dragontail technology enhanced glass from Asahi Glass Co who reported damage to two of its three factories.



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