John Paczkowski

Recent Posts by John Paczkowski

Three Key iPad 2 Parts Available Only From Japan

A caveat to yesterday’s reassurances about Apple’s component supply chain following the earthquake in Japan: Turns out the iPad 2 has at least five parts sourced from Japanese suppliers, and while some of them can easily be purchased from companies outside the country, there are evidently three that can’t be: its glass display overlay, battery and compass.

The latest iPad 2 teardown from IHS iSuppli suggests the device’s screen may be sourced exclusively in Japan. The research outfit’s tests found it to be quite a bit more flexible and durable than the glass used in the iPad 1, possibly indicating that it’s made from Dragontrail Glass–a material manufactured by Asahi Glass of Japan. At least two of the company’s facilities suffered damage in last week’s quake.

Also manufactured in Japan: the iPad 2’s battery and its electronic compass. The former appears to be made by Apple Japan, the latter by AKM Semiconductor. Both escaped the quake relatively unscathed, but are likely to be plagued by the shipping and logistical issues that inevitably follow catastrophic events like these.

“Suppliers are expected to encounter difficulties in getting raw materials supplied and distributed as well as in shipping out products,” IHS iSuppli’s analysts wrote. “They also are facing difficulties with employee absences because of problems with the transportation system. The various challenges are being compounded by interruptions in the electricity supply, which can have a major impact on delicate processes, such as semiconductor lithography.”

And while it might seem like a simple matter to locate alternative sources for these components, it’s not. If the iPad 2’s glass overlay is indeed Dragontrail, it’s proprietary to a Japanese supplier. The battery and compass also pose problems: Because of its very thin profile, the iPad 2’s battery almost certainly requires the advanced battery cell manufacturing tech for which Japan is known. Securing a new source for the device’s compass would be easier, but tweaking that source’s fabs to duplicate the calibration of the iPad 2’s compass, which works in close coordination with the tablet’s accelerometer and gyroscope, would be significantly more difficult. “It’s impossible to simply replace one manufacturer’s compass with another,” said iSuppli.

For these three components, then, Apple could face temporary supply issues not easily resolved by the company’s savvy supply chain management. And iPad 2 shortages could follow.

Which could be a bit troubling for investors, I suppose. That said, none of these things will impact consumer demand, which as best I can tell remains “amazing.