Apple facing shortage of iPad 2

Shanghai Daily, May 25, 2011

Apple's iPad 2 is already hard to come by in China but it will be even tougher to get your hands on one because of last Friday's explosion at a Chengdu factory.

The Foxconn Technology Group, which makes the hugely popular tablet computer and Apple's iPhone, has suspended production until an investigation finds out what caused the blast in one of its polishing workshops.

"We can't provide the iPad 2 now, I mean, all kinds of them. I can't tell you when they will be available," said a staff member at the Apple retail store in Shanghai's Huaihai Road West yesterday.

The other three Apple retail stores on the Chinese mainland, two in Beijing and the other in Shanghai's Lujiazui area, also reported iPad 2s in short supply.

The iPad 2, which was launched on the Chinese mainland market three weeks ago, was also unavailable from Apple's online store in China yesterday.

Apple China declined to comment yesterday on supply issues or when iPads would become readily available again.

The blast in the Foxconn workshop in southwest Chengdu City killed three employees and injured 15 others. Taiwan-based Foxconn then suspended operation of its polishing facilities in Chengdu and Shenzhen, Apple's only two polishing facilities for the iPad.

It is estimated Apple may face a production loss of 500,000 iPad 2s because of the explosion. The loss of production would be even greater if the polishing operations were out of action for more than a month, according to United States-based research firm IHS iSuppli.

And if Chengdu is where the majority of the computers are made then the blast could lead to lost production of 1.8 million to 2.8 million iPads, Bloomberg news reported citing RBC Capital Markets analyst Mike Abramsky.

The blast has also influenced the gray market for the product.

In Shanghai, the price of smuggled iPad 2 was 50 to 100 yuan (US$15) higher yesterday than a week ago. For example, a 16GB iPad 2 cost 3,880 yuan in an electronics mall near Shanghai Railway Station yesterday, 60 yuan higher than last week's price and almost 200 yuan higher than the official 3,688 yuan price tag.

"You had better buy it now. Who knows whether you can buy it later. There are so many unexpected things like earthquakes and explosions," said one store owner.

Japan's earthquake and tsunami forced several companies to halt production of memory chips, screens and other components used in the latest iPad models.