A key Chinese supplier of U.S. tech giant Apple is reportedly closing down its factory due to dwindling iPad sales.
With sales expected to remain weak in the coming quarters, Coretronic Corp, a Taiwan-based company that manufactures screens for the iPad, is halting production at its factory in Nanjing, Jiangsu Province. The factory is expected to complete liquidation by the end of this year, according to the National Business Daily.
The factory was set up 10 years ago to produce LCD backlight modules and optical devices for iPads. At its peak, it had 1,500 employees and produced around one million units a month.
“The closure of the factory is a direct and effective response to the decline of iPad sales. The impact is being passed down the line,” said Chen Juntao, Research Director at Analysys, a Beijing-based Internet consulting firm.
According to Canalys, Apple saw a 20 percent drop in iPad sales in the third quarter of this year, with quarterly sales falling below 10 million units for the first time.
Experts say that elastic demand for iPads is the main reason for sluggish sales and are calling for better product differentiation.
“The tablet market could be more segmented. Customers use the iPad to play games and entertain and educate themselves. So there is room for its development to be segmented. It needs product differentiation,” added Chen.
Compared with the stagnant iPad market, Apple shipped over 48 million iPhones in the last quarter, a 22 percent increase from the same period last year. And that was the primary contributor to the $11.1 billion profit that Apple made in the third quarter.