Friday, March 18, 2011

Developing iPad and iPhone Parts Shortage Because of Japanese Nuclear Crisis

Zero Hedge writes this morning:
The one aspect of the Japanese crisis that has so far received little attention is the component parts crunch that is starting to create its own earthquake through the supply chain. From Kyodo: "Concern over a shortage of components for manufacturers is spreading globally as many Japanese companies have been forced to suspend production in the aftermath of last week's devastating earthquake. Some of the effects have already surfaced, with U.S. automaker General Motors Co. suspending operations at a plant in Louisiana, while Chinese companies that rely on Japan-made parts are rushing to buy semiconductors.".... some are already sensing the impact on everyone's darling stock - Apple. iSuppli reports that the Japan quake could create iPad and iPhone shortages, a meme that is already pushing AAPL stock down. "The aftermath of the Japanese earthquake may cause logistical disruptions and supply shortages in Apple Inc.’s iPad 2, which employs several components manufactured in the disaster-stricken country—including a hard-to-replace electronic compass, the battery and possibly the advanced technology glass in the display, IHS iSuppli research indicates. The IHS iSuppli teardown analysis of the iPad 2 so far has been able to identify five parts sourced from Japanese suppliers: NAND flash from Toshiba Corp., dynamic random access memory (DRAM) made by Elpida Memory Inc., an electronic compass from AKM Semiconductor, the touch screen overlay glass likely from Asahi Glass Co. and the system battery from Apple Japan Inc." And the last nail is that as more production scrambles to be pushed to other locations, margins will plunge for all tech companies, forcing a wave of preannouncements within 2-4 weeks and crushing bottom lines
Very true, it has not been getting much notice in the general media. However, if you were a subscriber to the EPJ Daily Alert, you would have gotten your first warning on supply disruptions, last week. Last week Friday, I wrote:
As far as potential supply chain disruptions, chip companies based in Japan generated about $63.8 billion in revenue in 2010, accounting for about one-fifth of the semiconductor market. Their presence is felt most in the key market for what the industry calls NAND flash memory, chips at the heart of products like Apple's iPhone and iPad. Toshiba accounts for about 35% of global flash revenue.
Four days ago, the EPJ Daily Alert contained this:
On a shorter-term basis, some not insignificant financial damage may be done here in the United States as a result of the many products imported into the U.S. from Japan, from cell phone chips, to chips for Apple's iPad 2 to steel. If you are thinking of buying anything that contains a chip, buy it now. Supplies are likely to become tight for awhile.
Two days ago, the EPJ Daily Alert contained this:
Since Apple gets significant flash memory out of Japan, the continued availability of that supply source should be monitored.
The EPJ Daily Alert: Way ahead on the information and news curve. Find out more about the Alert, here.

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