Apple iPad 2 production is unlikely to be affected long-term by the explosion at a Foxconn production facility that killed three workers, according to an analyst.
An explosion at Foxconn's production plant May 20 killed
three workers and raised questions over whether production of the iPad 2 and
other Apple products will be affected.
cited combustible dust in the plant's polishing workshop as the
cause of the explosion, which also injured 15 workers. Foxconn manufactures
iPads and iPhones for Apple, among other products. Its production plant is
based in Chengdu, a city in southern China.
"Our current view is that this tragedy is likely to have
some impact on iPad 2 production; however, we believe Hon Hal has the
flexibility to shift manufacturing back to the Shenzhen facility if necessary,"
Brian White, an analyst with Ticonderoga Securities, wrote in a May 23 research
note sent to media. "As such, we currently don't expect a material impact to
Apple's iPad 2 shipments."
Apple has faced its share of Foxconn-related issues in the
past. In 2010, it launched a high-level investigation into 12 suicide attempts
that look place at the Foxconn facility throughout the first half of 2010,
complete with Apple COO Tim Cook visiting in June 2010. Apple also claimed it
commissioned an independent team of suicide-prevention experts to survey
Foxconn workers about their quality of life.
Throughout 2010, Apple completed first-time audits of 97
suppliers and repeat audits of another 30, for an apparent total of 288
supplier facilities audited since 2007. Much of the company's probing seems
focused on weeding out underage workers, protecting the rights of migrant
workers, and mapping the use of potential conflict minerals such as tantalum
and tungsten; however, it also cites improperly maintained machines and
violated engineering controls.
"Foxconn is not a sweatshop," Apple CEO Steve Jobs said
in June 2010
. "You go in this place and it's a factory but, my gosh,
they've got restaurants and movie theaters and hospitals and swimming pools.
For a factory, it's pretty nice."
Apple's mobile devices helped buoy the company's revenues to
$24.67 billion for the fiscal 2011 second quarter, with a net profit of $5.99
billion. Apple sold 4.7 million iPads during the quarter, which saw the release
of the iPad 2. Though Apple commands the lion's share of the tablet market and
continues to maintain a healthy presence in smartphones, it finds itself
increasingly challenged by a variety of manufacturers pushing devices loaded
with Google Android.
Apple is expected to issue a new iPhone and iOS later in the
year, along with Mac OS X 10.7 "Lion," the next version of its operating system
"Demand on iPad 2 has been staggering," Cook told analysts
and media during an April 20 earnings call. Despite that demand, however, he
expressed confidence that "we can produce a very large number of iPads for the