Foxconn closes its polishing plants; effect on iPad unclear

May 23, 2011, 11:35 AM UTC

The explosion that killed three in Chengdu on Friday has been traced to a dust-collecting duct

Broken windows and twisted metal from the blast. Photo: M.I.C. Gadget

There were several developments over the weekend following the explosion that killed three and injured 15 in a factory in southwest China that builds iPads for Apple (AAPL). (See Inside the Apple iPad factory.)

  • The third death was confirmed. Six of the injured have been sent home. The rest are still hospitalized.
  • The blast was traced to combustible dust that had collected in a “polishing workshop” duct in a recently completed factory complex in Chengdu, the capital of Sichuan province.
  • Taiwan-based Foxconn, which built the plants in part to meet demand for Apple’s iPads, has suspended polishing operations in all its factories, including in Shenzhen, China, where it runs the world’s largest electronics manufacturing facilities.
  • A Foxconn spokesperson told Bloomberg News that the company has more than a week’s supply of polished cases on hand and that assembly can continue while it performs safety checks.
  • The Chinese government has imposed a news blackout, according to the Chinese website M.I.C. Gadget; most of the information coming out of Chendu is through Taiwanese television and the Web.
  • Foxconn’s stock dropped as much as 5% Monday; Apple shares opened lower in Europe.
  • Analysts are still trying to assess the effect on Apple’s sales. “The supply of iPad 2 has been running tight due to manufacturing yield issues and component shortages,” J.P. Morgan’s Gokul Hariharan told the Wall Street Journal. “This is likely to accentuate [the iPad] shortage in the near term, at least in the second quarter.”