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Japan disaster: Apple to bear component costs

Apple may continue an unhindered supply up to May due to large inventory; but things could worsen in June.

To reduce the risk of shipping delays, Apple has reportedly agreed to bear the increased cost of components following the earthquake and tsunami in Japan, which has affected some of its parts suppliers.

According to a Digitimes report, Apple has decided to bear the additional costs so that shipments to customers may continue smoothly.

Other tablet makers are likely to suffer more if they cannot bear the increased costs, and this might benefit Apple in the end.

iPad 2 shipments are likely to go up to four million in the second quarter of this financial year.

Suppliers of anisotropic conductive films (ACF), used in liquid crystal displays, will sustain supplies up to May due to their large inventory, but could face shortage in the month of June.
Apple uses about 60 per cent of all the touch panels produced in the world.

The important components being sourced by Apple from Japan include battery, NAND Flash (a type a flash memory that keeps data stored even when power is switched off), touchscreen overlay glass and DRAM (dynamic random access memory).

Japan also used to serve as a strong market for Apple, and the recent earthquake may affect iPad 2 sales negatively.

However, one area in which Apple stands way above its competitors is with cash reserves, so it can afford to pay for the increased cost of components.

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