Apple may have delayed next-gen iPads over fire at LG Display’s subcontractor plant

iPad 3 (white, flat, finger on Safari)

An analyst report last Tuesday disappointed folks who were holding their breath for new iPads before this summer. As iDB told you, KGI Securities’ rather accurate analyst Ming-Chi Kuo cited a number of “technical challenges” that Apple is currently facing in manufacturing the second-generation iPad mini and fifth-generation full-size iPad, leading him to believe that both products won’t hit the market until Fall.

I’ve come across an accurate report which might explain that a fire which last week broke out in one of LG Display’s subcontractor plants has forced Apple to frantically seek for alternative suppliers who could supply backlight units for iPads and MacBooks. All options are on table, including the display-making unit of Apple’s frenemy Samsung…

Specifically, a week ago, on April 10, the fire broke out in Heesung Electronics’ plant in Nanjing, Jiangsu Province, China. Apple uses the company’s backlight units for iPads and MacBooks, procuring them via LG Display, one of Apple’s several screen suppliers.

Just a day before, sources within Taiwan-based suppliers reported that Apple was gearing up to start mass production of the fifth-generation iPad in July-August.

The fire incident was first reported by The Electronic Times Internet, an online publication based in Seoul that covers electronics and technology news.

You can tell Apple’s in dire straits because it’s now considering Samsung Display as a potential candidate. One industry official said Apple as early as the following day requested an emergency meeting with Samsung, which was held in the United States on April 11.

iPad (two-up, iPad, iPad mini, hand)

The iPhone maker typically sources parts from multiple suppliers in order to minimize risks and mitigate any potential disruption stemming from natural disasters and unpredictable events such as this unfortunate incident.

Because the full recovery of the Heesung plant is expected to take at least six months, and knowing the firm used to account for “a considerable amount” of backlight units supplies for Apple, other LG Display subcontractors may not be able to fully cover for Heesung.

And without backlight units that provide illumination for liquid crystal displays to produce a visible image, there is no iPads, MacBooks or any other Apple product that relies on LCD screen technology.

The damage from the fire was first estimated at CNY 200 million, or approximately $32.23 million. However, investigators shortly after increased the figure and warned that the plant won’t be back online for at least six months.

Apple faced a similar crisis in May 2011 after an explosion rocked Foxconn’s iPad plant in Chengdu, China.

Good thing Apple’s boss is a guy who knows a thing or two about the intricate supply chain.

For years, current CEO Tim Cook was running Apple’s supply chain as operations chief. He still keeps tabs on that aspect of Apple’s business, although he handed day-to-day operations to his right-hand man Jeffrey Williams, one of Apple’s best-paid senior vice presidents.

After Cook became the Apple CEO, 49-year-old Williams assumed many of his duties and is now largely responsible for managing Apple’s supply chain and making sure that trains run on time.