iPad 2's glass could be critical component in future shortages

iSuppli analyst points to reports of earthquake damage at Japanese plants that may provide glass overlay for Apple's tablet

Production of Apple's iPad 2 may be hit with component shortages caused by the Japanese earthquake and tsunami, an analyst said today.

According to IHS iSuppli, one the likely suppliers of the iPad 2's hardened glass overlay is a Japanese company that last week acknowledged earthquake damage to one of three factories, while a second has been affected by a nearby fire.

"There are two major types of hardened glass that could be used by the iPad 2," said Wayne Lam, an analyst with iSuppli. "One is Corning's Gorilla Glass, and the other is Asahi Glass Co.'s Dragontrail Glass. "Both behave very similarly. They're still glass, but they're very flexible, hardened and scratch-proof."

Early last week, Tokyo-based Asahi Glass confirmed that one of its three glass-producing facilities had been "Partially damaged" and that it would take a month to restart production at the factory. A second plant even closer to Tokyo was also offline because of a fire at a neighboring oil refinery.

Asahi did not immediately reply to questions today about the status of its Japanese factories.

Lam and other analysts at iSuppli have speculated that Asahi is the supplier of the glass that protects the iPad 2's touchscreen.

While Lam said iSuppli is still "chasing down leads" to determine whether Asahi's glass is used on the iPad 2, the research firm said last week that the timing of the Japanese company's January announcement of Dragontrail, as well as tests it has run on the overlay, led it to believe Dragontrail Glass is being used.

The supplier of the iPad 2's electronic compass, AKM Semiconductor, which is also located in Japan, was not affected by the disasters of March 11, Lam confirmed today.

Although much of the conversation about the impact on Apple has centered on NAND flash memory -- Apple consumes about 20% of the world's production -- iSuppli noted today that damaged Japanese factories supply a quarter of the globe's silicon wafers and 70% of the worldwide supply of the main raw material used to make printed circuit boards.

Shortages in those materials could impact Apple along with most other consumer electronics companies.

"What we don't know about Japan is how quickly these companies can get their production facilities back up," said Lam today. "That's the big question."

It's possible, for example, that some companies could boost production at unaffected plants, or retool other facilities they own outside Japan to manufacture their products. The latter, though, is difficult, said Lam, who noted that companies would have to "qualify" the new facilities with their customers before delivering components, a time-consuming process.

The picture should be clearer with the next few weeks.

"The Japanese companies have generally been very, very quiet about this," Lam said. "I would think we would know better within weeks, not months."

If production resumes at Japanese companies like Asahi in the next two weeks, the impact should be minor, said iSuppli in a research note published Monday, since downstream producers have stockpiles they can draw on.

Potential iPad 2 component shortages couldn't come at a worse time for Apple, which last week extended the delay between online ordering and shipping to 4-to-5 weeks, and which has faced long lines of customers at its retail stores.

"Right now they're running through that first batch of materials," said Lam, referring to the Chinese companies Apple contracts with to assemble the iPad 2. "The real problems could come for the second and third batches."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@ix.netcom.com.

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