The Fallout from Foxconn's Deadly Explosion
Shares of Foxconn's parent company Hon Hai fell as much as 5 percent Monday following the explosion that killed 3 people and injured several more in South Western China on Friday. Hon Hai, the world's largest contract electronics manufacturer, said Monday it's closing all of its polishing plants for inspection, a move that could delay new shipments of Apple's popular iPad 2 tablet computers. Here's the latest on the explosion and what it means for Apple.
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The explosion In a press release, Foxconn said that initial findings point to an "explosion of combustible dust in a duct" that caused the accident. However, it's "still being investigated by a joint investigation task force led by government officials and law enforcement authorities." Star Chang at M.I.C. Gadget reports that many Foxconn workers are too scared to describe what happened at the plant for fear of reprisal from their superiors. The Los Angeles Times' Benjamin Haas digs a little deeper and finds that the explosion could be due to malfeasance on the part of Foxconn, as workplace hazards were reported at the plant. "Workers told us that the polishing department windows were shut and there was aluminum dust floating in the air," says Cheng Yi Yi, a member of a corporate watchdog group. "The facility wasn't even completed. There were prime conditions for an accident." Filiup Truta at Softpedia wonders if the accident will spark another "wave of suicides" at the plant, as the manufacturer works its employees harder to play catchup.
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The effect on Apple Speaking of catchup, Christian Zibreg at 9 to 5 Mac says the explosion could affect up to a third of Apple's total iPad 2 output, not a promising sign for a gadget already facing the "mother of all backlogs." The information comes from the Asian trade publication DigiTimes, whose sources say "Foxconn’s Chengdu site shipped 25-30% of the total iPad 2 devices shipped in April, while its Shenzhen site made up the remainder." Meanwhile an analyst at Barclays Capital tells the Wall Street Journal that the explosion shouldn't cause significant delays. "Even in a worst-case scenario in which there are significant iPad 2 production disruptions in Chengdu in terms of either metal casing component shortages or assembly line shutdown, we expect Hon Hai's original facilities in Shenzhen could quickly make up some of the shortfall from Chengdu by ramping up the idle capacity," he said. Apple shares opened lower in Europe Monday.
