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March 17th, 2011 at 10:24 AM EST | by inu846W

iPad 2 Shortages May Last Months

At least two companies Apple uses to help manufacture iPad 2 have temporarily shut down to assess damages due to last week’s earthquake and tsunami in Japan. This may cause production delays that could last into June.

Gene Munster from Piper Jaffray is aware of the dynamic situation with some iPad 2 production companies and said they haven’t been able to fully determine damages and currently don’t have a timeline for resuming production.

Mitsubishi Gas Chemical Co. and Toshiba have temporarily shut down. The former supplies BT resin used in production printed circuit boards for chips in iPad and iPhone while the latter produces about 40% of the world’s flash memory, a lot of that used in iOS devices.

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But recent events may not spell doom and gloom for Apple. They’ve signed on with other vendors to meet production needs in times like these. Apple’s competitors may not have put such plans onto action themselves.

Munster goes on to say:

“This strategy has proven to be an effective way for Apple to leverage its balance sheet and its position as one of the largest buyers of many of the components it uses; moreover, this strategy may prove particularly helpful if supply is limited and pricing increases.”

“Finally, we believe Apple buys futures on important components, which will help offset near-term pricing swings. Our conclusion is that Apple is well positioned to suffer proportionally less than its competitors.”

 

The earthquake and tsunami in Japan may cause component prices to rise and effect Apple’s profits in the 2nd half of 2011. Profits in March may be cut by as much as $200 million.

Munster’s price target for Apple stock remains unchanged at $483 per share.

The launch of iPad 2 in Japan has also been delayed.

iPad News Via: appleinsider.com

 

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