Foxconn Turmoil Could Hamper iPad 2 Supplies

The main Foxconn factory for Apple Inc.’s iPad located in China’s Southwestern Sichuan Province capital city of Chengdu grinded to a halt last week due to a deadly explosion, according to a Hong Kong news agency.

Foxconn Corp. is Taiwanese owned and is a strategic player in the technology industry, serving as the outsourced manufacturer for majority of Apple’s popular products such as the iPad 2, iPhones, Sony Corp. game consoles as well as Dell Inc. computers says Bloomberg. The result of the disaster could deplete the supply of iPad 2 by 400,000 units, which is an estimate of 3 to 5 percent of total iPad 2 shipments, according to South Korean researcher Displaybank Co. At least three people were killed and around 15 injured from the accident.

The factory was one of Foxconn’s newest plants and is part of China’s largest contract manufacturer. The impact of the explosion is causing ripples in the market regarding supplies, in particular the iPad 2. According to Digitimes, Apple will be using Taiwan-based backlight module makers Coretronic for the iPad 2. Although this is yet to be confirmed, Apple currently sources Taiwan-based Radiant for its backlight modules. Coretonic’s supply has already been affected by Japan’s earthquake and tsunami catastrophe in March.

Incidentally, Apple’s latest computer tablet, the iPad 2, will be released in Taiwan on May 27. Apple has sold 4.69 million iPads in the first quarter of this year, giving them a competitive advantage of 80 percent market share for new tablet devices.

Based on Gartner Inc. market researchers, there is an expected output of 47.96 million iPads for 2011, which would be a spike of 14.77 million units from the previous year. If accurate, this staggering supply would constitute around 70 percent of the projected global computer tablet market.

There are still constant reports of worker suicides from Foxconn factories in Chengdu, including the latest incident allegedly occurring on May 26, according to reports from Hong Kong news agencies.

Research from the Students and Scholars Against Corporate Misbehaviour (SACOM) released in May indicated that Foxconn workers are treated like “machines.” The Hong Kong-based international labor group released a survey, which recorded interviews with the mainland Chinese workers, which revealed that the workers were coerced into extensive labor for intensive hours with “military-style training.”