As the market for consumers electronics continues to grow, there is one problematic question that faces the industry – can supply keep up with demand? More specifically, there are a number of “rare earth” minerals that are crucial in creating electrical components for an array of consumer electronics that include the iPhone and iPad but also more generally in LCD TVs and laptops, but have been very hard to locate in large quantities.

The concern about supplying such rare earth minerals may be quelled, however, with Japanese scientists discovering huge deposits of these rare earth minerals on the floor of the Pacific Ocean around Hawaii. more promising is that the deposits are of a heavy concentration with just “one square kilometer (0.4sq miles) of deposits [from the region] able to serve one-fifth of the current global consumption”. The discovery was made by a team from the University of Tokyo, led by Yasuhiro Kato, an associate professor of earth science.

He estimated rare earths contained in the deposits amounted to 80bn to 100bn tonnes – compared to global reserves currently confirmed by the US Geological Survey of just 110m tonnes that have been found mainly in China, Russia and other former Soviet Union countries, and the US.

The news has been met with positivity by consumer electronics companies and has seen a boost in share prices of non-Chinese mining companies that specialise in rare earth mineral mining. It comes after consumer electronics companies last year faced uncertainty when China last year slashed rare earth exports. The move, primarily in trade of the minerals of tantalum and yttrium, was frowned upon because China currently produces 97% of the global supply.

Sony said at the time that the move was a hindrance to free trade. Japan, which accounts for a third of global demand, has been stung badly, and has been looking to diversify its supply sources, particularly of heavy rare earths such as dysprosium used in magnets.

[Via The Guardian]

Two reports out of DigiTimes today reveal that there will likely be component shortages in the next two months as a result of the Japanese earthquake and tsunami from earlier this year. Since the devastating crisis, many PC and mobile device makers have been downplaying the impact the crisis would have on component supply and prices, but DigiTimes reports that this was largely to try and quell any increase in component prices by the suppliers. In reality, many key players from Asus, HTC, Motorola and Apple have been aggressively acting to secure various components such as PCBs and glass touch panels.

Japan’s earthquake as well as the power brownout policy have already created strong pressure on the global IT supply chain, especially for PC players and in addition to component shortages, the labor shortage issue in China has also grown to become another menace to the IT industry.

The strong pressures on the component supply chain will likely result in shortages beginning next month with supply still hampered from the impact of the Japanese crisis. Prices too will inevitably rise for many of the key components such as touch panels in the face of inadequate supply. It may also bring the unfortunate consequence of more defective components being used as manufacturers become desperate to maintain production to keep up with demand.

DigiTimes also reported today that Foxconn, which is a key manufacturer for Apple products, is facing not only a shortage of components but also labor. The double knock on supply may be enough to impact on shipments of iPad 2 and iPhone 4 orders in the second quarter. Foxconn, in responding to the suggestion, said that the company has extensive experience in dealing with “arranging manpower to assist clients in reaching their goals” and that it will do all it can to keep up with client demands.

[Via DigiTimes (1) (2), Image via iFixIt]

At Apple’s financial report yesterday there was an interesting revelation by Tim Cook that Apple had recently begun entering agreements with suppliers of key components. The agreement is presumed to be around $3.9 billion dollars and would secure the key strategic resources used in Apple’s products going into the future and there are suggestions it’s for high resolution displays.

As to what components are being secured, Cook didn’t elaborate but did say the deals were similar in nature to the flash memory deals of late 2005. That deal, and subsequent deals around flash memory secured supply for many of Apple’s portable devices including the iPhone and more recently the iPad.

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