IHS iSuppli: Manufacturing issues caused iPad 2 shortfall

Pointing to manufacturing problems that led to an undersupply of the new Apple tablet, the research firm has cut its estimate for iPad 2 shipments for this year.

Manufacturing problems led to the shortfall of the iPad 2 during the first quarter, IHS iSuppli said yesterday, prompting the research firm to trim its forecast on Apple's tablet shipments for the year.

Apple

As iPad buyers have run into sold-out stock at Apple stores and long wait times ordering online, questions have arisen over why supplies of the new tablet failed to come close to demand.

Though it raised the specter of supply chain problems caused by the Japanese earthquake and tsunami, IHS iSuppli doesn't see the disaster as contributing to the iPad shortfall. Following the earthquake, Apple quickly moved to ensure that it would have the necessary components to ship the iPad 2 last month. Instead, the firm pointed to manufacturing problems with specific components.

"IHS iSuppli sources indicate that Apple's production was stymied by manufacturing difficulties, which--combined with strong demand--led to short supplies of the popular tablet," noted the firm's report. "Those issues, according to the sources, included quality concerns with liquid crystal display (LCD) panels, production shortages of the new speaker, lamination issues with one of the touch suppliers, and end-unit production shortfalls."

Though Apple has since been able to bump up production of the new tablet, the company still won't be able to meet its targets for April. Beyond that, a shortage of supplies owing to the Japanese earthquake could hinder Apple's ability to ramp up production enough in the second half of the year to compensate for the initial shortfall, said the firm.

As a result, IHS iSuppli now expects Apple to ship 39.7 million units of both the original iPad and the iPad 2 in 2011, down 9 percent from its February forecast of 43.7 million.

Based on the firm's estimate of 15.1 million iPads shipped last year, it also now expects iPad shipments to rise 163.3 percent this year, down from its February estimate of 189.6 percent. However, the initial short supply is not expected to pose a problem in 2012. Looking at next year, IHS iSuppli has upped its estimate on iPad shipments to 62.2 million from 61.6 million previously.

Over the short term, Apple will continue to retain its dominance and edge over competing tablet makers on content, price, marketing, and momentum, the report said. Apple is forecast to lose its majority share of the tablet market late next year or early 2013, but it will still end 2012 with more than 50 percent of all tablets sold and hang on to a big lead beyond that.

"While Apple may lose its dominant share, there is no sign yet of a serious opponent to challenge Apple's place as the tablet market leader at least through 2015," IHS iSuppli analyst Rhoda Alexander said in the report.

IHS iSuppli

 

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