Monday, February 01, 2010

Asian companies hope to reap iPad boom

The iPad may have been designed in the United States, but Apple's money-spinning products are manufactured in the high-tech factories of east Asia.

If the new tablet computer follows the iPhone and iPod by capturing the imagination of consumers around the globe, component makers in Taiwan, China and South Korea will reap the benefits.

"The iPad is likely to stimulate global demand for high-tech products and components," said James Chen, the vice president of Taiwan-based display and touch panel maker Wintek Corp.

Confidentiality agreements between Apple and its suppliers means no company is willing to openly discuss who does what, but analysts are free to make informed guesses.

Wintek is widely seen as a likely supplier of iPad parts, although Chen declined to either confirm or deny the company's involvement.

The new touchscreen device, which was unveiled Wednesday, seeks to establish an entire new category between laptop and smartphone, but it does so by combining well-known components, most of them produced in Asia.

While the touchscreens are widely thought to be made by companies like Wintek, the chips are likely to come from companies such as Japan's Toshiba and South Korea's Samsung Electronics.

South Korea's LG Display is named as a probable supplier of the displays, while Taiwan's Hon Hai Precision Industry, a veteran Apple supplier, is believed to be in charge of assembly.

"In Taiwan, I expect Hon Hai will become the biggest beneficiary of Apple's iPad," said Mars Hsu, a Taipei-based analyst with Grand Cathay Securities.

Hon Hai Precision was not immediately available for comment.

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However, an official at Innolux Display, Hon Hai Precision's flat panel manufacturing arm, told AFP on condition of anonymity that the company will try its best to team up with Apple in the production of the iPad.

Meanwhile, Simplo Technology and Dynapack, both of Taiwan, have been major battery pack providers for Apple in the past, and they could maintain their role, Taiwan's Capital Securities said in a report.

"They've already served as component suppliers to Apple's iPhone. That means they've reached economies of scale and enjoy cost advantages," said Taiwan International Securities analyst Michael Chiang.

But on the big question -- how much money the iPad will make for the suppliers -- the jury is still out.

An official with South Korea's LG Display said the latest Apple device was likely to revitalise the market as a whole.

"The iPad will help increase demand for new components," he said on condition of anonymity.

Also among the optimists was Taiwan-based Topology Research Institute, which this week raised its 2010 forecast for iPad sales to seven million units from five million previously.

In a statement, Topology said it based its higher forecast on iPad's pricing strategy, with the cheapest version costing as little as 499 US dollars.

However, TLG Asset Management analyst Arch Shih said it was too early to say how much iPad will do to lift contract makers' profitability.

The reason is the global economic outlook, with further volatility in US securities markets threatening to spill over into the real economy, he said.

"A market pullback could impact global demand for high-tech products. At the moment, I'm cautious about iPad sales," Shih said.

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