A rumor from Digitimes suggests Foxconn may not be able to fulfill Apple's upcoming orders for the iPad 2 and the iPhone 4. Sources from upstream component makers claim the Chinese company is facing a shortage of both labor and materials at its plant in Chengdu, China. This facility is one of several Foxconn locations that manufacture the iPad 2.
The bulk of Apple's iPad supply still comes from the main Shenzen plant, but this slowdown at an auxiliary plant could prevent Apple from eliminating its iPad 2 backlog. Foxconn is reportedly assuring its customers that it will do all it can to meet its customers' orders and is working on rearranging its workforce to get back to 100 percent productivity.
This rumored information contradicts comments made by Tim Cook during Apple's quarterly earnings in April. Cook was optimistic that iPad 2 production levels were on the rise and was "very confident" that Apple could "produce a very large number of iPads for the quarter." Cook also confirmed that iPhone 4 production levels were right on track to meet demand in all their markets. Either something has dramatically changed in the three weeks since this conference call, or this rumor from Digitimes is off-base.