Component shortage leads to secret stockpiling

Concerns over component shortages for smartphones and tablets are gathering pace with reports that many firms are secretly stockpiling inventory ahead of expected disruption in June.

While both component suppliers and device manufacturers are apparently claiming that they have not seen any shortages and won’t do so until the end of the month, a Digitimes source has said that Asustek, Acer, Motorola, Apple, HTC, Quanta and Compal have all started to make aggressive moves – to ensure that they have sufficient component supply.

All of these firms have reportedly been working to build up inventory behind the scenes, though they wisely kept schtum about the situation in order to avoid suppliers upping their prices.

Following the Japan earthquake there has been a knock-on effect for production which is gradually working its way down the chain, recently hitting Pace shareholders.

And it is thought that towards the end of the month companies will begin to feel the pinch, with talk of price hikes and increases in defective components affecting products.

Interestingly, it was also noted that there’s a certain amount of trepidation among manufacturers about over-enthusiastic inventory stocking. That’s in case the impact on production of component supplies is not as heavy as suggested in some quarters, which could lead to inventory depreciation.

With labour shortages alongside material in China, it’s thought that Apple is going to be facing difficulties with supplies for its iPad 2 and iPhone 4, with Foxconn reportedly unable to meet demand.

Foxconn told Digitimes that it is doing everything it can to make sure it meets the needs of its client, but was unable to quash rumours that labour shortages would affect shipments.

While Apple has seen impressive sales of its iPhones it plans to build on its remarkable first quarter results, meaning piling even more pressure on suppliers, with whisperings that it will be doing the same for the iPad 2. It’s exactly what the local labour groups don’t want.

And this is not good news for Asus, whose Transformer tablet may have been muscled out somewhat by Apple’s long term supplier contracts.

Asus recently claimed that shortages were due to massive popularity rather than a lack of materials.