It will be hard for Apple to find a second manufacturer for its iPad tablet computers after the explosion at Foxconn's Chengdu plant, an industry analyst said Tuesday (May 24).
"The demand for the iPad is still there and is expected to reach 35 million to 40 million units this year. The issue is on the supply side, which has been affected by the earthquake in Japan in March and the recent fire at Foxconn's factory in Chengdu," Helen Chiang, a senior research manager at International Data Corp (IDC), told Taiwan's Central News Agency.
The incident has raised concerns that Apple may seek another reliable source to reduce the supply risk of relying on a single producer, but Chiang said it will not be easy to replicate the existing partnership model.
"It will take time and experience to verify the quality and reliability of possible ODM candidates," she said. "Although some Taiwanese contract makers, such as Quanta Computer Inc, are capable of reaching mass production of tablet devices, it will require time to try out the partnership model."
Chiang said Apple is likely to shift some orders but a large-scale transfer is not expected this year in light of the long-term confidential deal with Foxconn.
During the transfer process, some impact on Apple's margin is likely but only in the short term because its infrastructure and business model are still very clear, Chiang added.
She noted that Quanta has the best chance of all Taiwanese ODM manufacturers to become a second producer for Apple's iPad because of its mass-production capability and its ability to customize products.
Local authorities said the explosion in Foxconn's plant in Chengdu, Sichuan was caused by combustible dust, according to New York Times.
The blast, which happened on Friday evening (May 20) killed three workers and injured 15. Foxconn, one of the world's biggest electronics contractors, shut down the plant pending investigation.
Chengdu officials in a preliminary investigation said the explosion had been caused by combustible dust in an air duct at a polishing workshop.
Students & Scholars Against Corporate Misbehavior, or Sacom, a Hong Kong-based workers rights group, accused Foxconn of neglecting security issues in its factories. The group had investigated the Chengdu factories in March and April, pointing out that workers began operating the facilities even before the plant had been fully completed. Steel bars and bricks were everywhere and dust was scattered in the canteen and workshops, Sacom said.
A Hon Hai spokesman on Monday (May 23) accused Sacom of seeking to capitalize on the tragic accident and misrepresenting the company's "commitment to the health and safety of our employees."
In a further statement on Tuesday, Hon Hai said that "while workers are provided with the necessary safety equipment," the company "is always working to make improvements." The company said that its polishing workshops have the highest concentration of aluminum dust but the actual polishing work in those facilities is done by "high tech robots," so employees only come into contact with product parts after the polishing work has been carried out.
"We are addressing this challenge through improvements in workshop ventilation and the air-conditioning system and further enhancements to policies and practices," the statement said. "Should the ongoing investigation identify any specific areas where enhancements could be made, we will not hesitate to immediately implement those measures."
Experts said combustible dust is a common problem in China. Zhong Shengjun, associate professor at the Industrial Explosion Protection Institute of Northeastern University in Shenyang said that in theory dust problems can be avoided but that current technology has not fully resolved the problem and it would take greater investment to address the issue, according to Wall Street Journal. Zhong said there were five polishing explosion accidents in China last year that resulted in several deaths.
Source:China Watch Times.com
