iPad 2 Parts Could Be Squeezed By Japan Disasters

SAN FRANCISCO, March 17 (Reuters) – Apple Inc (NASDAQ:AAPL) may
face shortages of key components for its newly-released iPad 2
as a result of the earthquake in Japan, according to a report
released on Thursday.

Several key components in the new version of Apple’s
popular iPad tablet PC come from Japan, including the battery
and the flash memory used to store music and video on the
device, according to research firm IHS iSuppli.

The iPad 2 battery, which IHS iSuppli said is "unusually
thin", is manufactured by Apple Japan, an Apple subsidiary, and
likely requires advanced manufacturing technologies that reside
in the country.

"Logistical disruptions may mean that Apple could have
difficulties obtaining this battery, and it may not be able to
secure supply from an external, non-Japanese source," the
report said.

Production at many Japanese manufacturing facilities has
come to a halt following Friday’s 9.0 earthquake and subsequent
tsunami, which has left more than 5,600 people dead and
destroyed swaths of the country.

Toshiba Corp (T:6502), which is one of the companies that
produces the NAND flash memory used in the iPad 2 according to
IHS iSuppli’s research, briefly shut down a flash memory
manufacturing facility in Japan and warned it could face
hurdles distributing its products.

Suppliers of other components whose factories weren’t
damaged are likely to be affected by logistical issues, such as
difficulties procuring raw materials and shipping finished
products, the report said.

Apple launched the iPad 2 in the United States last week to
strong demand, with many stores selling out of the device and
analysts estimating that the company sold 1 million units
during the debut weekend.

The current wait time for an iPad ordered online is 4-5
weeks. Apple declined to say how that would be affected.

On Tuesday, Apple said it would delay the launch of the
iPad 2 in Japan as "the country and our teams focus on
recovering from the recent disaster." An Apple spokeswoman told
Reuters the decision to delay sales had nothing to do with any
component shortages.

Among the other iPad 2 components sourced from Japan listed
in the IHS iSuppli report are a compass from AKM Semiconductor
and DRAM memory produced by Elpida Memory Inc (T:6665). A
touchscreen overlay glass is likely from Asahi Glass Co, IHS
iSuppli said.

The report said that some of these components, particularly
the flash and DRAM memory chips, could be procured from
alternative suppliers.
(Reporting by Alexei Oreskovic; editing by Carol Bishopric)