New iPad: Potential Shortages Due to Low Yield of Retina Displays
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Investors and analysts around the globe are constantly trying to predict how well a company is doing in the market. Apple is consistently at the top of the heap when it comes to forecasting sales and stock prices.
Recently, analyst Shaw Wu with Sterne Agee told investors not to worry about potential slowdown of iPad shipments. Its not due to a decrease in consumer interest, but a limited supply of Retina display parts, as well as enforced labor compliance that only lets factory worker remain on the job for 49 hours per week.
The Retina display debacle has been talked about for months leading up to the release of the new iPad Sharp and LG were supposed to help Samsung supply the millions of display units needed to meet demand, but Apple rejected their product because it did not meet the company’s rigorous standards. Samsung has been on its own for most of the manufacturing time. There are rumors that both Sharp and LG have joined the team having recently begun small-volume shipments.
AppleInsider recently reported that Shaw Wu told investors that the demand for the new iPad is not slowing down, but after checking with sources within the supply chain, Apple continues to have a strong interest in the tablet. The culprit, in part, is with low supplies of Retina Display manufacturing.
The other issue slowing down production of the new iPad is a recent crackdown on labor violations at Apple’s biggest manufacturing partner, Foxconn. The factory recently had a visit from the Fair Labor Association who discovered that there were quite a few violations taking place, including allowing employees to work as much as 80 hours per week. Foxconn agreed to reduce worker hours to no more than 49 hours per week.
Based on this information, Wu increased his estimates for sales of the new iPad from 11.5 million units to 12.3 million units. The analyst also increased his price target for AAPL stock from $740 t0 $750.
