Production of Apple’s new iPad has slowed causing some investors to be concerned that demand for the device is dropping off. This is not the case, according to Sterne Agee analyst Shaw Wu, who says that the new iPad remains high in demand and that the limited production is due to the shortage in Retina displays and the implementation of more sound labor practices following the Fair Labor Association report on Foxconn.
Wu checked with Apple’s supply chain and found that the company still has strong demand for iPad orders, but that current Retina displays have been limited to only one supplier—Samsung. LG and Sharp were both expected to supply Retina displays, however, their screens did not meet Apple’s high standards and have been rejected. It’s believed that they have made improvements and have already started small shipments.
Wu also partially attributes the slow down of iPad production to the controversies over labor conditions at Apple’s manufacturing partner Foxconn. The FLA recently performed an independent audit of Foxconn’s factory, discovering several labor law violations, including excessive working hours, which the manufacturer has promised to fix.
Since iPad production has slowed due to component delays and labor issues, Wu believes demand is still strong and has raised sales estimates for this just ended March quarter to 12.3 million units, up from 11.5 million. Total sales for the new iPad in 2012 is now pegged at 63 million units.