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A new report from DigiTimes suggests that Microsoft may have a low-yield problem with their new Surface Tablet because of the Magnesium Alloy case. Apparently, Microsoft was already courting manufacturers before the debut of the Surface. They were wanting to buy as many as 5 million units worth of magnesium-aluminum cases. Unfortunately, the top manufacturers were not going be able to come close to that capacity for full-fledged magnesium-aluminum designs.
Eventually Microsoft settled on a different technology, which is called VaporMg. It is basically a magnesium chassis with a surface treatment that makes it similar to a traditional metal chassis. Also, to get this done, Microsoft had to turn to a second-tier manufacturer to make the device, and unfortunately the yields will be much smaller than they had hoped. Here's a quote with more details,
The sources pointed out that before Microsoft launched Surface, the company has inquired at several metal chassis makers about their available capacity and revealed to these makers that its orders for Surface tablet PCs will go as high as five million units before the end of 2012; however, the chassis makers were forced to give up because of lack of capacity.
Although Microsoft's current chassis design for Surface allows the device to feature a similar exterior and sturdiness as traditional magnesium-aluminum, while having several color choices, the drawback of the design is that the device will be heavier.
The sources also pointed out that the chassis is supplied by a China-based supplier, but since the company is a second-tier maker, its low yield rates are causing Microsoft to pay a lot of attention to the supplier's manufacturing process hoping for improvements.
Of course, sometimes DigiTimes has some questionable accuracy so take this story with a grain of salt.