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Apple Risks IPad Production Loss of 500,000 After Blast

Apple Inc. (AAPL) may face a production loss of 500,000 iPad 2 tablets after the explosion at Foxconn Technology Group’s plant in Chengdu, China, according to research firm IHS ISuppli.

The drop in manufacturing will depend on how long the plant is closed following a May 20 explosion that killed three people and injured at least 15, according to ISuppli. The total could be even greater if the suspension of operations at the facility lasts longer than a month, the firm said.

Another Foxconn factory in Shenzhen that produces iPads may not be able to make up for the lost output, ISuppli said. The manufacturing breakdown may lead Apple to miss ISuppli’s forecast of 7.4 million iPad 2 shipments in the quarter ending in June, the El Segundo, California-based research firm said.

Mike Abramsky, a technology analyst with RBC Capital Markets, speculated last week that the impact may be larger. If Chengdu is where Apple manufactures most of its iPads, instead of the Shenzhen factory, the blast could lead to lost production of 1.8 million to 2.8 million iPads, he said. Abramsky had predicted 8 million iPad shipments during the period.

By contrast, Shaw Wu, an analyst with Sterne Agee in San Francisco, said in a report today that the concerns are “overdone” and that production at other facilities is being ramped up to make up for the shortfalls. He expects Apple to sell 6.8 million iPads in the June quarter.

Apple, based in Cupertino, California, fell 82 cents to $334.40 today in Nasdaq Stock Market trading. The shares have risen 3.7 percent this year.

Steve Dowling, an Apple spokesman, said last week that the company is working closely with its Taiwanese partner to determine the cause of the explosion.

To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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