iPhone 4S Christmas shipments strong, Apple finds a new iPad 2 battery supplier

Contradicting the sense of disappointment which settled in immediately following the iPhone 4S launch (largely stemming from the unchanged exterior design), Apple’s fifth-generation iPhone is by all accounts off to a great start. Positive early reviews and one million pre-orders in the first 24 hours – the most for any new product that Apple has ever launched – can’t be wrong. Meanwhile, sources from Apple’s supply chain in an Asia report have encouraging news. DIGITIMES, a Taiwanese daily newspaper for semiconductor, electronics, computer and communications industries, reported this morning that Pegatron, Apple’s #2 contract manufacturer tasked with producing one in seven iPhone 4S units, has landed orders for a cool fifteen million units of iPhone 4S with holiday quarter shipments in the 2.5 million units range.

As Pegatron accounts for about 15 percent of all iPhone 4S orders, this would indicate shipments of seventeen million iPhone 4S units for the Christmas quarter. The story is based on a report by the Chinese-language Commercial Times and corroborates a similar rumor from July. Apple has reshuffled its supply chain a bit for its handset and is understood to have commissioned long-time partner Foxconn and Asustek spin-off Pegatron to produce iPhone 4S (more on the economics of Apple’s supply chain here). Pegatron is also aiming to land orders for the iPad 3, DIGITIMES has it, and is looking to assemble Ultrabooks for Lenovo and Asustek because they can now produce premium metal chassis. Speaking of iPad, another DIGITIMES article asserted Apple had shifted orders from long-time battery supplier Simplo to Dynapack over defective iPad 2 battery packs causing leakage problems:

Because Li-polymer battery packs used in iPad 2 have been found to be defective, Apple in late September shifted some orders from Simplo Technology which produced the defective products at its factory in eastern China to Dynapack International Technology, according to industry sources. The sources believe that the defective batteries may have leakage problems, which can cause a short circuit, but since iPad 2 adopts Li-polymer batteries, which use rather stable chemical materials, leakage will not create an explosion or fire hazard, but could cause problems with recharging.

Simplo chairman Raymond Sung acknowledged the issues, insisting they are now fixed and that orders have been re-shipped. Monthly battery module shipments for iPad 2 reportedly reached five million units for the fourth quarter of this year, suggesting shipments of at least fifteen million iPad 2 units for the holiday quarter. Simplo, which also provides Apple with batteries for the MacBook Air and MacBook Pro, will supply 60 percent of the volume and the rest will be sourced from Dynapack, DIGITIMES’ sources claim. It’s not unusual for Apple to tap multiple vendors or manufacturers for the same component. This drives prices down while ensuring continuous supply and flexibility, all of which comes into play if products are to be shipped on time and in volume.