How will Japan disasters affect Apple’s iPad and wannabe rivals’ supply chains?

“Apple releases the iPad 2 on Friday and on the very same day a 9.0 earthquake rocks Japan, one of the centers of NAND flash production,” David Morgenstern writes for ZDNet. “What might the fallout from the quake be to Apple’s product availability and rollouts as well as to prices?”

“According to analyst Jim Handy at Objective Anaysis Semiconductor Market Research, a number of Fujitsu and Toshiba manufacturing sites are located near the earthquake epicenter,” Morgenstern reports. “In addition, Tokyo, Kobe and other centers are located on the east coast of Japan… Apple NAND suppliers are not all in Japan. According to iSuppli, Apple is supplied by Toshiba and Samsung as well as other vendors. However, Apple primarily purchases flash memory from ‘top flight’ vendors, such as Samsung and Toshiba. Most of Apple’s DRAM comes from Korean vendors and would be unaffected.”

Morgenstern writes, “As one of the world’s biggest customers for the technology, [Apple] will get its supply before the smaller buyers — even if those ‘smaller’ companies are Hewlett Packard, Motorola and even Samsung. In the manufacturing business, Japanese manufacturing giants and the arms of Korean chaebol conglomerates can’t play in-house favorites. The biggest customer gets first choice. That means that everyone else, big and small will feel the pinch more than Apple. Way more.”

Read more in the full article here.

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]

Related articles:
Apple Japan goes the extra mile in earthquake’s aftermath – March 15, 2011
Apple helps iTunes users donate to Japan earthquake and tsunami victims – March 13, 2011

21 Comments

    1. It sucks more to live in Fukushima. Does anyone else read this article like: “Okay, so there was this huge earthquake… where 10,000+ people died. but how does it affect my toys?”

      1. You make an excellent point. I’ve got a friend who’s now on a tear to raise money for the dogs that are running loose and at risk in Japan. Although I’m a serious dog-lover myself, who cares about the dogs when HUMAN BEINGS need food?

        Just goes to show that people in general today have themselves and their self-motivated interests at the top of their priority list.

        Anyone reading this should stop and say a prayer for the millions affected by this catastrophic event and stop worrying about the price or availability of an electronic gizmo with an apple on it or the stock market’s current volatility. This too shall pass and cannot be considered suffering compared to being homeless and having nothing but the clothes on your back and the loss of your close friends and family.

      2. Aftermath of the catastrophe has global influence on many areas of humanity and its activities.

        It is hypocritical to pretend it does not happen and stupid to not asses consequences of the tragedy beyond horrible humanitarian aspect.

        Also, iPad is not only a toy; doctors work with it to save people’s lives every day. Including in Japan right now.

      3. Yes, thank you for responding appropriately. When I saw the headline “How will Japan disasters affect Apple’s iPad and wannabe rivals’ supply chains?”I’m like, geez…10,000+ are dead and David Morgenstern wants to ask this out loud? who cares about toys?

      4. As I was waiting in line at the Apple Store in Palo Alto, my first thoughts were that it was horrible and felt for the people who were being hurt and killed. Then I realized that the tsunami would reach the coast of California and started to assess my own situation. While actual specific information wasn’t available online at the time, there were tide charts I could look up with my iPhone app and use that with the tsunami predictions to realize family and property would be safe.

        I didn’t just stop there and stop caring about Japan, nor did I stop my life and sit and worry about Japan 24/7.

        There are consequences to what happened in Japan that affect many aspects of life around the world. Sorry if DRAM production seems inconsequential compared to the death and destruction, but there are jobs and families dependent on those jobs as they relate to things like this.

        As someone who analysis the industry, it’s specifically their job to assess what impact things like this will have, instead of just sitting idly by and worrying about the situation.

        As for the dogs… Sure, humans are the first priority, but if this person has a background in dealing with dogs and is equipped to do something but needs funding, perhaps this is exactly what they should be doing.

        If you have the means to give or participate, that’s great, and please do so in whatever way you’re best suited to, but please don’t criticize others for responding to the situation in the roles they have.

  1. I bet Apple also has prepaid prices locked in to they will not have to buy on the spot market. This will isolate them (to some extent) from price pressures and devastate the competition.

  2. before some hippie-bastard chimes in with the “iPads/technology vs human toll/Americans’ priorities” bull-schlock—-this site is about technology, specifically Apple and it’s clueless “competitors”.

    Life moves on and so does the news- so before you post here, your energy would be better used pressing the “Donate” button on the iTunes site.

    DO IT NOW!

    1. Well, I won’t be surprised if Apple does end up paying some bonus for the delivery, despite the locked-in pricing and quantities. After all, if there ever is a force majeure that can trigger some CYA clause in this supply contract, a 9.0 cataclysmic earthquake is certainly it.

    2. …”your energy would be better used pressing the “Donate” button on the iTunes site.”

      Access to iTunes is blocked from my office (a stubborn IT Security character who has no issues with IE6/7 on desktop, but blocks access to iTunes store wholesale…). However, we have several Japanese colleagues, who provided us with plenty of links to legitimate charities doing relief work on the Japanese disaster. So, already done.

  3. Already donated Japanese earthquake disaster.
    Now with the nuclear catastrophe on hand even with Apple superior supply chain at some point there will be delay in the shippment of the IPad2. Maybe it time for Apple and it supplier to start thinking of bring production back home. Would not a made in USA logo look good on an Ipad2.
    I do not want to be taking anything away from the Japanese, who economy will be taking a beating after this disaster. Production must continue and I much see it come this way then go to China.

  4. Maybe it’s time we started making things in North America again! It’s almost impossible to find stuff that’s “Made in USA” or “Made in Canada”. I’d like to see it more often again.

    1. The only way iPads could be made in America is if Apple could find factory workers willing to work for $0.85 per hour. Foxxcon workers are actually paid even less (about $130 per month) so let’s just assume the cost of shipping all that stuff to the largest market (America and EU) makes the difference.

      The few things that are still ‘Made in USA’ are cars and items of similar complexity/value. Also, some cheap clothing, sewn together in sweatshops by immigrants of questionable legal status, working for close to that $1 per hour…

      1. Frightening but no I think factory workers should be paid at least minimum wage (whatever that happens to be in the USA). I just think that products (no matter what they are) should be made in the country of the product designers headquarters. Apple in this case is an American company so therefore it’s products should be made in the US.

  5. This disaster is terrible. Apple should ship some iPad 2s to Japan ASAP to help with disaster relief and cleanup and to enable displaced people to access the Web and communicate with their friends and family.

    Most of the components in the iSuppli iPad teardown are from Korea, Taiwan and the USA, not Japan. Apple did what is known as an “upfront buy” a huge contract to pre-order components and lock in low prices and supply of NAND, Touchscreens and Batteries, etc. It is not that Apple is a “big customer” that gives them first choice, it’s that they already paid ahead for the year. Competitors that are not even in production and have not ordered yet are not going to be able to get their orders in for many months.

    1. Read what Apple did in Japan:

      Apple Japan goes the extra mile in earthquake’s aftermath

      You absolutely right in terms of Apple having large and upfront contracts with suppliers. What’s going to happen is everyone who was buying from Japan will need to buy from Korea, sending prices skyrocketing and in some cases even having parts be simply not available. This will impact Apple far less than others short term.

      However, mid term, this may be a bigger issue for Apple as supplies for some components built in Korea come from areas affected in Japan.

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