UPDATED 07:21 EDT / MARCH 31 2011

Apple Absorbs Increased Costs To Continue iPad2 Shipments

The earthquake in the Japanese archipelago not only affected the human inhabitants of Japan, but also the business environment at a global level. The technology sector is particular is now facing, and will continue to face, hardships due to Japan’s leader position in the chip-making sector, flash memory and more. Earlier this month, on the launch of the iPad 2, Apple’s website mentioned a waiting period of 1-2 weeks for shipping the tablet, whereas after the Japanese earthquake, the period extended to 4-5 weeks, Apple importing many of its components from Japan. At the middle of this month, the price of chip memory skyrocketed:

Stuart Jeffrey, analyst at Nomura, said: “The revenue exposure towards those high-end Japanese components is highest at HTC, followed by Apple, Nokia, Research in Motion, Motorola Mobility and Sony Ericsson.”

Apple announced it would absorb the increased costs caused by the supply disruption of component in Japan in order to ‘secure sufficient supply of touch panels. It has been suggested that Apple makes use of 60 percent of the global supply chain touch panel capacity.’ Apple aims at shipping four million iPad2 units in the second quarter of this year, and surely needs some assurance that the supply of components will not be discontinued. At the moment, Apple’s stocks would last for only  the next two months.

“However, for other tablet PC vendors, purchasing pressure will increase and if they are unable to absorb the extra costs, which will only give Apple more advantages in the market,” the report noted.

Apple’s stock shares fell to $348.63, but regained their position at $349.99.


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