Foxconn iPad Plant Explosion: Investors are Worried About Apple

Reports from China (NYSE:FXI) detail an explosion at a Foxconn factory near Chengdu on Friday that killed three workers and injured up to twenty more. The plant was reportedly contracted by Apple (NASDAQ:AAPL) to manufacture iPads and iPhones, and was recently engaged specifically in production of iPad 2 tablets. Apple representatives have since commented on the incident, saying “We are deeply saddened by the tragedy at Foxconn’s plant in Chengdu, and our hearts go out to the victims and their families.”

Apple has also sought to reassure investors that the explosion will not cause any major setbacks in production. According to CNET News, Terry Gou, Chairman of Foxconn parent company Hon Hai, told the China Times that, “the explosion would not delay iPad 2 production or new products related to the iPad or iPhone that are set for production in the third quarter.”

However, some investors remain concerned that the plant explosion, coupled with a recent report in Taiwan’s Digitimes claiming that Apple’s (NASDAQ:AAPL) supply chain is already falling short of meeting production goals for expected 2Q demands, could prove to slow the company’s sales in the coming months. According to the report in Digitimes, even prior to the incident, Foxconn factories in China have been facing shortages of both “labor and materials…which are likely to affect shipments of iPad 2 and iPhone 4 orders in the second quarter.”

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