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Wednesday, May 25, 2011
Foxconn Plant Explosion in China To Cause Production Disruption of iPad 2

Due to Foxconn plant explosion in Chengdu, China on May 20, 350,000 ~ 400,000 units of iPad2 production will be disrupted, according to Korean-based Displaybank research firm.

Foxconn's Shenzhen and Chengdu are mainly producing iPad 2 and Chengdu plant is producing about 32%. Due to this explosion, about 3~5% of total production disruption is expected.

Chengdu plant, in charge of parts and assembling of iPad 2, is in operation for total of 24 production lines. A05 plant, where explosion occurred, produces iPad 's back cover, while there are 4 other back cover production plants located in Chengdu, including A05, with a daily production of about 50,000~60,000 units.

Due to the explosion, A05 stopped the production, while the rest 3 back cover-producing plants also stopped the production for safety checks. A05 plant is expected to be reactivated in the mid-June, and inspection period of other 3 plants will be 4~7days, so they will be reactivated within this week.

Ricky Park, senior analyst at Displaybank noted "Given existing back cover production capacity, the total production disruption will be approximately 550,000~700,000 units, but since current inventory is about 200,000~300,000 units, actual production disruption will be about 350,000~400,000 units. However, through procurement from Shenzhen plant, damage will be minimized."

Park added, "Foxconn planned to increase iPad2 production volume from Chengdu plant to a similar level of Shenzhen plant in June and further increase production in July, but due to the explosion, this plan is also expected to be disrupted."

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