iSuppli, the company responsible for thorough product teardowns of Apple products, reported Thursday that the Japanese earthquake could affect iPad 2 supply volume, since at least five components from that device are likely sourced from Japanese suppliers, including a few hard-to-replace parts.
The specific parts iSuppli has been able to identify as mostly likely sourced from Japan include NAND flash from Toshiba Corp., DRAM from Elpida Memory Inc. and touch screen overlay glass for the display likely made by Asahi Glass Co. The battery (from Apple Japan Inc.) and electronic compass (from AKM Semiconductor) are also produced by Japanese suppliers, and are so specialized they could be quite hard to replace from suppliers located elsewhere.
Other components may have been sourced in Japan besides those identified above, but the teardown process isn’t always capable of identifying the country of origin of all parts, iSuppli cautioned. It also noted at least a few of Apple’s Japanese suppliers reported that their facilities didn’t sustain any damage as a result of the earthquake, but that problems with logistics and other factors could still affect the supply chain at those facilities.
iSuppli also noted that semiconductor facilities in Japan, at least, can’t recommence full production until all aftershocks have stopped. According to Dale Ford of IHS, which acquired iSuppli in 2010:
Earthquakes ranging from 4 to 7 on the Richter scale will make it impossible to really restart these fabs until the earthquakes stop happening with such frequency. Every time a quake tops 5, the equipment automatically shuts down.
Apple can find alternate sourcing for NAND memory, including South Korea’s Samsung corporation and the U.S.-based Micron Technology. Samsung can also provide the DRAM, but when it comes to the other major Japanese-made components, finding a suitable replacement may not be so easy.
The electronic compass found in the iPad 2 is apparently calibrated very specifically to work with the tablet’s accelerometer and gyroscope, and is highly sensitive to electromagnetic interference. According to IHS, this means it can’t just be swapped out for a similar product from another manufacturer.
The glass used to protect the iPad’s touchscreen is thought to be the new Asahi Glass Dragontail product, which is stronger than the glass used in the original iPad. If Asahi is indeed the supplier, it would pose problems, because the company has reported damage to three of its facilities in Japan. Since the glass is a proprietary product, sourcing alternatives might lead to variances in quality.
Finally, the iPad 2′s battery, while labeled as “assembled” in China,” looks to actually be made by Apple’s Japanese subsidiary. IHS Senior Analyst Wayne Lam explains why Apple may have had to stick with in-house manufacturing for this particular component, making it difficult if not impossible to have it built elsewhere:
Typically, battery cells are made at the site of assembly but because the iPad 2’s lithium-ion polymer battery is unusually thin, it likely requires advanced battery cell manufacturing technologies that reside in Japan.
Obviously, iPad 2 supply levels are the least of Japan’s worries right now, but this could mean that Apple will have trouble meeting customer demand in the U.S., and might even lead to a general postponement of the international launch of Apple’s latest tablet. Apple’s share value dipped earlier on the week, due partially to supply fears, and while prices recovered yesterday, this latest report won’t do much to allay those fears, either. We reached out to Apple for comment, but have yet to hear back.