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I believe that's roughly where the M1 chip itself sits on the motherboard inside the iPad. If you're gaming or doing a lot of intense work tasks, it will get warm. Nothing to worry about.
 
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The chip sits right behind the apple logo. The heat opposite of the pencil charger is where the display is powered.

My 2018 12.9" Pro gets hot when watching anything above 50% brightness for more than 20 minutes. Nothing to worry about.
 
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