Apple Inc could face a production loss of 500,000 iPad 2 tablets after the explosion at Foxconn Technology Group’s (富士康) plant in Chengdu, China, according to research firm IHS iSuppli.
The drop in manufacturing will depend on how long the plant is closed following the explosion on Friday, which killed three people and injured at least 15, iSuppli said.
The estimated production loss could rise further if the suspension of operations at the facility lasts longer than a month, iSuppli said.
Another Foxconn factory in Shenzhen that produces iPads might not be able to make up for the lost output, iSuppli said. The manufacturing breakdown could lead Apple to miss iSuppli’s forecast of 7.4 million iPad 2 shipments in the quarter ending in June, the research firm said.
Mike Abramsky, a technology analyst with RBC Capital Markets, speculated last week that the impact could be larger.
If Chengdu is where Apple’s iPads are mainly manufactured, instead of the Shenzhen factory, the blast could lead to lost production of 1.8 million to 2.8 million iPads, he said.
Abramsky had predicted 8 million iPad shipments during the period.
By contrast, Shaw Wu, an analyst with Sterne Agee in San Francisco, said in a report on Monday that the concerns were “overdone” and that production at other facilities was being ramped up to make up for the shortfalls.
He expects Apple to sell 6.8 million iPads in the quarter ending June.
In Taipei trading, Hon Hai Precision Industry Co (鴻海), which sells its products under the Foxconn brand, saw its share price rise 3 percent to NT$103 yesterday, following a 2.91 percent decline on Monday. The stock got a boost after the firm said it has a week of inventory, allowing it to continue operations as it completes safety checks following the Chengdu explosion.
“Knowing that production won’t be affected gave the market confidence today,” said Calvin Huang (黃文堯), an analyst at Daiwa Securities Group in Taipei, who rates Hon Hai “buy.”
“Previously, the company hadn’t said anything about the situation” regarding production and inventory, he said.
TLG Asset Management (台壽保投信) analyst Arch Shih (施博元) said Hon Hai’s dive on Monday was simply a knee jerk reaction to the explosion on fears that the company’s iPad 2 production for Apple would be seriously affected.
“But, after Apple remained resilient on Wall Street overnight, many investors seem relieved and started to think the impact from the explosion could be limited,” Shih said.
Goldman Sachs said it did not expect any material impact from the explosion as the plant in Chengdu was not the major production line for iPad 2.
Hon Hai is expected to continue to increase its supply to Apple, with possible adjustment of the production schedule, Goldman Sachs said.
HANDOVER POLICY: Approving the probe means that the new US administration of Donald Trump is likely to have the option to impose trade restrictions on China US President Joe Biden’s administration is set to initiate a trade investigation into Chinese semiconductors in the coming days as part of a push to reduce reliance on a technology that US officials believe poses national security risks. The probe could result in tariffs or other measures to restrict imports on older-model semiconductors and the products containing them, including medical devices, vehicles, smartphones and weaponry, people familiar with the matter said. The investigation examining so-called foundational chips could take months to conclude, meaning that any reaction to the findings would be left to the discretion of US president-elect Donald Trump’s incoming team. Biden
INVESTMENT: Jun Seki, chief strategy officer for Hon Hai’s EV arm, and his team are currently in talks in France with Renault, Nissan’s 36 percent shareholder Hon Hai Precision Industry Co (鴻海精密), the iPhone maker known as Foxconn Technology Group (富士康科技集團) internationally, is in talks with Nissan Motor Co’s biggest shareholder Renault SA about its willingness to sell its shares in the Japanese automaker, the Central News Agency (CNA) said, citing people it did not identify. Nissan and fellow Japanese automaker, Honda Motor Co, are exploring a merger that would create a rival to Toyota Motor Corp in Japan and better position the combined company to face competitive challenges around the world, people familiar with the matter said on Wednesday. However, one potential spanner in the works is
HON HAI LURKS: The ‘Nikkei’ reported that Foxconn’s interest in Nissan accelerated the Honda-merger effort out of fears it might be taken over by the Taiwanese firm Nissan Motor Co has become the latest buyout target in Japan as it explores a merger with Honda Motor Co and faces an overture from Hon Hai Precision Industry Co (鴻海精密), known as Foxconn Technology Group (富士康科技集團) internationally. Shares in Nissan yesterday jumped 24 percent, the most on record, to hit the daily limit, after the two Japanese automakers acknowledged that talks are ongoing to better position themselves for competitive challenges during a time of upheaval in the global auto industry. Foxconn — a Taipei-based manufacturer of iPhones, which has been investing heavily in factories to build electric vehicles — has also
CHIP SUBSIDY: The US funding would help alleviate the financial pressure from building two fabs in the US and should lift gross margins in 2026, the company said GlobalWafers Co (環球晶圓), the world’s third-largest silicon wafer supplier, yesterday said it is to receive US$406 million in subsidies from the US Department of Commerce for two new US fabs under the CHIPS and Science Act, with the first batch of the funds likely coming next year. The grant represents 10 percent of the planned investments of US$4 billion in advanced semiconductor wafer manufacturing facilities in Texas and Missouri, GlobalWafers said. The commerce department is to disburse the funds based on the completion of project milestones over a multiyear timeframe, the company said. Along with the tax credit, which is equal to
RSS