As demand for Apple's iPad is expected to turn strong for the year-end holidays, Foxconn Electronics (Hon Hai Precision Industry) recently started mass production of iPads at its new plants in Chengdu, China. Although the production lines can only manufacture about 10,000 units each day, the capacity is still expected to help satisfy demand, according to sources from upstream component makers. However, Foxconn declined to comment.

Foxconn had previously refuted claims that the company would establish iPad production lines at the plants in Chengdu, but related component players have pointed out that Foxconn already started shipping iPads from the site in November and expected the site to become a major supply base starting the first quarter of 2011.

Currently, most of the iPad supplies still come from Foxconn's plants at Shenzhen, China and the site is capable of supplying 2.5 million units maximum each month, with volumes fluctuating based on the supply of components such as touchscreen modules or panels. iPad shipments in the fourth quarter could surpass seven million units with volumes for 2010 to reach 15 million units, the sources pointed out.

Foxconn plans to setup about 50 iPad production lines at its plants in Chengdu with an annual maximum capacity reaching about 40 million units, the sources noted.

iPad 2 is expected to launch by the end of the first quarter of 2011 with Foxconn Precision Component and Foxlink all become component suppliers. Meanwhile, Chimei Innolux (CMI), which is also related to the Foxconn Group, is expected to supply panels for iPad 2.