iPad 2 Demand Beyond Expectations, Apple Facing Component Shortage

The iPad 2 launch has been such a success that even Apple was caught off guard by the amount of people who showed up at Apple retail stores across the nation last Friday. Many buyers eager to purchase a new iPad came back home empty handed, as Apple retail locations, as well as Walmart, Best Buy and Target stores ran out of stock in a matter of hours. Trudy Muller, an Apple spokesperson, shared with The Loop some thoughts about the launch, and stressed the fact that consumer demand was nothing short of “amazing.”
“Demand for the next generation iPad 2 has been amazing,” Apple spokesperson Trudy Muller, told The Loop. “We are working hard to get iPad 2 into the hands of every customer who wants one as quickly as possible.”
However, Muller declined to comment on how many iPad 2s were sold over the weekend, an information that should be disclosed by Apple within the next couple of weeks. Note that unofficial estimates show sales figures between 600,000, and up to 1 million units sold in less than 24 hours, more than 3 times the record set by the first generation iPad back in April 2010. The situation is very similar to what happened shortly after the launch of the first generation iPad, as Apple seems to have difficulties keeping up with the demand. Apple stores across the U.S. quickly ran out of devices to sell, and the Apple online store currently shows shipping lead times of over 3 weeks. Despite the higher-than-expected demand, the current shortage can also be explained by lower-than-expected component yields, for both processor (Apple A5, currently built by Samsung), and touch screen panels (coming from a slew of suppliers, including Samsung, LG, and Chimei Innolux) used to build the iPad 2. As a result, production output is still fairly low, and leads to higher production costs: each tablet costs Apple an extra $47 to build, when compared to its predecessor. The iPad 2 is still cheaper to manufacture than most other tablets on the market though, thanks to its strong sales figures, and over time, iPad 2 components yields are poised to improve, which will in turn increase the amount of tablets available for purchase, and drastically lower the iPad 2 manufacturing costs.