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Apple Struggling To Meet The Demands of iPad 2

Apple is struggling to meet the demand for its recently launched iPad 2. It may also be suffering from supply-related issues, as several parts used within the device – including its touch panel – come from Japan, a country recently affected by earthquakes and tsunamis.DigiTimes reported Wednesday that Apple has been in talks with Taiwan-based component makers about touch panel pricing, and the Cupertino, Calif., company has allegedly considered some price increases in negotiations.

Capacity shortages in Taiwan are not Apple’s only supply chain problem. Apple may also be forced to ramp up additional vendors for the iPad 2 due to product constraints caused by the recent earthquake in Japan. Based on a recent iPad 2 tear down by iHS iSuppli, Apple currently sources five key components from Japanese manufactures impacted by the earthquake.

iHS iSuppli found the iPad 2 contained a compass from AKM Semiconductor, the main battery from Apple Japan, touch screen glass from Asahi Glass, DRAM from Elpida Memory and NAND from Toshiba.

Apple allegedly plans to build 40 million of its popular iPad in 2011. In order to reach that goal, and keep up with crushing demand for the iPad 2, Apple has reportedly booked more than 60 percent of the total global supply chain touch panel capacity.

Concern over touch panel supply has grown since the earthquake and tsunami disaster struck in Japan. Last week, it was said that Apple’s manufacturing partner, Foxconn, has two to three weeks’ worth of components stockpiled. Should the situation in Japan not improve by that time, Foxconn could reportedly face a stockout.

Even before the disaster in Japan, Apple’s control of the lion’s share of the global touch panel market has been predicted to squeeze the company’s competitors throughout 2011. Apple Chief Operating Officer Tim Cook revealed in January that his company committed $3.9 billion toward secret long-term component contracts, money believed to be directed toward touch panel displays.

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