Foxconn explosion could slow Ipad production

THE EXPLOSION at Foxconn's manufacturing plant in Chengdu, China, could delay the delivery of 500,000 Apple Ipads, according to the abacus twitchers at Isuppli.

Isuppli estimates that the plant makes roughly half a million of the devices a month and warned that if the explosion, which also killed some people, leads to a shutdown in the month of June, it could mean that Apple will end the year half a million tablets short.

The firms are still investigating whether a plant shutdown is necessary, and of course, the other possibility is that any downtime could last longer than a month.

"Foxconn chairman Terry Gou reportedly said that the explosion will not delay the production of the iPad in the third quarter", said the analysts.

"However, IHS iSuppli believes this view is dependent on a return to full production pending the results of an investigation. IHS iSuppli research indicates there likely will be some impact on production in the second quarter."

Although there is a second production plant in Shenzhen, it's not big enough to take up the slack of a closure in the other building, Isuppli added.

"The Shenzhen facility at present has capacity to produce 7.5 million units in the second quarter - iSuppli forecasts 7.4 million iPad 2 units will be shipped out during this period," the analysts added.

"To support these shipments, Foxconn must manufacture a larger quantity of devices, at between 7.8 and 8.1 million units during the second quarter. This means that Foxconn's shipments will fall short of expected levels by between 300,000 and 600,000 units in the second quarter."

Perhaps more controversial was speculation by Isuppli that the explosion, and any decision on whether to postpone production, could impact Apple's corporate social responsibility standing.

"The impact of the explosion will reignite the debate regarding Apple's corporate responsibility. This debate began in 2010 when a number of Foxconn employees committed suicide and blame was placed on working conditions," said Isuppli.

"Apple as a global company is accountable to all stakeholders for the conduct of its business, and the proper balance of safeguards and regulation will be debated because of the multiplicity of opinions on the topic. In the end, Apple will have to drive a level of corporate responsibility that is acceptable to its stakeholders." µ