Chinese Plant Blast Could Affect iPad Supply


Explosion at Pegatron may cause minor delays to Apple iPad 2 production

Apple’s market-leading iPad 2 may face delays in production due to an explosion at one of its manufacturing plants in China.

The explosion, which hit Shanghai based supplier Pegatron over the weekend, has raised concerns over Apple’s ability to meet demand for the tablet.

Low risk of disruption

While no fatalities were reported, 61 workers were injured and 23 were hospitalised when an accumulation of aluminium dust caused an explosion in the workshop where iPad cases are polished.

In a Reuters report, Pegatron claimed the risk of disruption to Apple’s supply chain would be minimal, since, according to Chief Financial Officer Charles Lin, “The factory has not started operations yet. Part of the facility is still under pre-operation inspection and part is running trial production.”

This is not the first disruption to hit Apple’s supply chain in the past year. In March, the earthquake that hit Japan resulted in a shortage of  iPad components and a decision to delay the launch of the iPad 2 in that country, while the 20 May explosion at a Chinese factory owned by Taiwanese tech manufacturer Foxconn claimed the lives of three workers and injured 15 others. That explosion was expected to affect production of up to 400,000 units, according to analyst reports.

In October, Chinese officials ordered the partial closure of Catcher Technology’s casings manufacturing plant over environmental concerns, according to a Financial Times report.

Apple’s supply chain in China has also been mired by scandal over the past few years, with accusations of poor environmental policy coupled with allegations of worker abuse and unfair working conditions that were tantamount to slave labour.  These reportedly resulted in a spate of suicides at Foxconn in the past few years and Steve Jobs personally defended Apple against the claims in 2010, stating that “We look at everything at these companies, and I can tell you a few things that we know: Foxconn is not a sweatshop.”

Earlier this year, Apple’s troubles in the East continued, when its annual report on its supply chain revealed a growing child labour problem, with almost 100 under-age children employed by suppliers.

Watchdog group, China Labour Watch (CLW), believes responsibility for the blast lies squarely on Apple’s shoulders, claiming that Apple has systematic control over the operation of its supplier factories. “Apple’s supplier factories have to buy raw materials from companies designated by Apple. The design of the assembly line also needs to be approved by Apple. Therefore, the supplier factories have little power to make any changes on the production and the factory management.”

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