Wall Street Not Worried About Foxconn iPad Facility Blast, But Should You Be?

While the impact of deaths and injuries from the Foxconn explosions should not be minimized, analysts Monday discounted the effect on iPad 2 production as minimal and ‘temporary.’ But is a 20-30% decrease in production when Apple is already struggling to fulfill demand really minimal?

“We see this issue as temporary,” UBS Investment Research analyst Maynard Um told investors. “Supply chain sources” told him the Chengdu, China plant made only 20 percent of Apple’s iPad 2 production. Admittedly, the blast which reportedly killed three and injured 15 “is unlikely to help supply issues.”

Echoing Um, DigiTimes also reports the plant produced fewer than 30 percent of iPads.

The Friday explosion in Foxconn’s “polishing plant” will not impact production nor hinder production of “new products” such as the much-discussed new iPhone. Foxconn Chairman Terry Gou was quoted by China Times after meeting with major suppliers.

Foxconn has suspended production in the plant during an ongoing police investigation. The explosion was not the result of foul play, according to the Chengdu Municipal government. In a statement, Apple was “deeply saddened” by the event, according to a statement from the Cupertino, Calif.-based company.

Comment »