Chengdu

Following the release of Apple’s “2012 Supplier Responsibility Report,” Apple announced it would be the first technology company admitted to the Fair Labor Association. The FLA will “independently assess facilities in Apple’s supply chain,” and then publish its independent findings online. Apple announced through a press release today that the first audits have officially started with FLA President Auret van Heerden and his team beginning inspections at Foxconn City in Shenzhen. Apple CEO Tim Cook said the audits are “unprecedented in the electronics industry”:
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The Chinese Economic Daily News via Bloomberg reports that Foxconn plans on spending NT$47B to build stores in China which will sell Apple products, which of course it also produces.  The information was relayed by the unit’s Chairman Steve Chang.

Back in January, we reported:

Foxconn subsidiary Cybermart has been granted retail permission from Apple and will begin selling Apple products in April of this year. Cybermart currently has 34 stores across the Greater China area, with 7-8 more stores planned for 2011. The report also states that Cybermast is planning to open as many as 500 stores, that will retail Apple products, in the future.

Foxconn is becoming a pretty powerful player in Apple’s fortunes in China and the world.

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Besides the extremely unfortunate loss of life, Bloomberg posts a dire scenario on iPad production laid out by IHS iSuppli this evening:

The drop in manufacturing will depend on how long the plant is closed following a May 20 explosion that killed three people and injured at least 15, according to ISuppli. The total could be even greater if the suspension of operations at the facility lasts longer than a month, the firm said.

Another Foxconn factory in Shenzhen that produces iPads may not be able to make up for the lost output, ISuppli said. The manufacturing breakdown may lead Apple to miss ISuppli’s forecast of 7.4 million iPad 2 shipments in the quarter ending in June, the El Segundo, California-based research firm said.

Not all analysts are as down with Apple Bull Shaw Wu saying there may not be cause to worry.  He said in a report today that the concerns are “overdone” and that production at other facilities is being ramped up to make up for the shortfalls. He expects Apple to sell 6.8 million iPads in the June quarter.

Related articles

• Foxconn closes all of its electronic parts polishing workshops for 2 days (9to5mac.com)
• The Foxconn explosion might affect up to one third of total iPad 2 output (9to5mac.com)
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scene from Foxconn explosion

According to the WSJ, Foxconn has suspended production across many of its plants in China for two days while the government investigates the explosion that killed three people and injured many more.

Hon Hai Precision Industry Co., a Taiwan-based company better known by the trade name Foxconn that operates dozens of factories across China, said it closed all of its workshops that handle polishing for electronic parts and products pending further inspections.

At issue appears to be the flammable aluminum dust that comes from polishing parts like the iPad 2’s aluminum back.  A student group out of Hong Kong called Sacom published a report on the dangers of flammable airborne aluminum dust in a report on May 6, saying workers complained about inhaling the dust and about poor ventilation. It isn’t clear whether the workshops referred to in Sacom’s report include the site of the accident.

The news is another setback for Foxconn, which is barely past a recent outbreak of public suicides.

Should the Chengdu production capacity not be restored anytime soon, Hon Hai may have to hire more expensive labor in Shenzhen, said Arthur Hsieh, an analyst at UBS.

While Foxconn has dominated the contract manufacturing industry until now, analysts say Hon Hai competitors like Singapore’s Flextronics Inc. and Taiwan’s Quanta Computer Inc. could try to woo some of its customers, including Apple.

The prospective plant closures and their affect on Apple’s iPad were assessed by Digitimes earlier today. 
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An Apple Store Manager relayed to us that the new iPad 2 displays are able to turn into “normal iPads” with a few swipes in secret combination.  To find out if true, I went to the Soho store and tried it out.  Yep, it works.  The button still doesn’t work so it is easy to get yourself stuck – like in Email Setup below:

I’m not going to post the gesture combination unless it hits the web but it does exist and Store managers know it.

Anyway, the moral of the story: Those are normal iPad 2s under the glass, even though they have different part numbers.
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