Recently an explosion occurred in Foxconn’s Chengdu plant in China where some production of Apple’s (NASDAQ:AAPL) iPad 2 takes place. iPad accounts for only 7% of our $430 price estimate for Apple stock, which means that any potential loss in iPad 2 production should have a muted stock impact. Moreover, it looks like less than 20% of the iPad 2 production volume comes from the Chengdu facility. [1] This is good news for Apple, as there were already some lingering doubts over Apple’s capability to increase iPad 2 production due to labor and raw material related constraints (see Supply Chain Issues Resurface for Apple). Although iPad’s contribution to Apple’s stock value is small, its growth is important for Apple as iPad’s increasing presence creates a halo effect on its other more valuable products like the iPhone and Mac computers. Apple’s iPad continues to show faster growth than competitors Research in Motion (NASDAQ:RIMM), Nokia (NYSE:NOK) and Motorola Mobility (NYSE:MMI) in the tablet market.
See our complete analysis for Apple stock here
Notes:- Foxconn explosion won’t greatly affect iPad 2 production for Apple, AppleInsider quoting DigiTimes as the source, May 23 2011 [↩]
