Foxconn to ship iPad 2 by the end of February 2011

Foxconn Electronics' (Hon Hai Precision Industry's) plants in Shenzhen, China have recently been notified they will ship Apple's iPad 2 within the next 100 days with initial shipments to reach 400,000-600,000 units, according to sources from Taiwan-based component makers. However, Foxconn declined to comment on its products or clients.

The sources pointed out that the iPad 2 will ship as soon as the end of February in 2011. Apple originally planned to start mass production in January, but because the device's firmware is currently still in testing, Apple has been postponing the schedule. Since Foxconn's new plants in Chengdu are still in pilot production, iPad 2 will be mainly supplied by its Shenzhen plants, while the company's upstream component partners have all been notified of the shipments schedule.

For the third quarter, Apple announced it had sold 4.19 million iPads with combined sales for the first nine months in 2010 reaching 7.5 million units. As Apple will start selling iPad in South Korea and Latin America in the fourth quarter, as well as strong demand from the year-end holidays, sales for the quarter are expected to surpass seven million units.

Currently, iPad's shipments on the supply side are higher than channel sales, indicating that Apple also has potential inventory issues, although Apple currently has no plans to stop production. The sources expect shipments to drop significantly after the end of the January as the company begins to digest the inventory across the rest of the first quarter and then launch iPad 2 in April.

The sources pointed out that Foxconn shipped about six million iPads in the third quarter of 2010, meaning there are about 1.8 million units of inventory left for the fourth quarter. The sources forecast that Apple will still place about 1.6-1.8 million units of orders in January, but will start to reduce order volumes in February to allow the remaining inventory to last until the end of March.