The iPhone 6 is expected to have a larger screen, so analysts generally believe it will help Apple Inc. (NASDAQ:AAPL) capture market share from big-screen opponents. As a result, they’re projecting strong demand for the smartphone, which of course means good things both for Apple and its suppliers. Unfortunately, however, Credit Suisse analysts believe upside to Pegatron Corporation (TPE:4938) (OTCMKTS:PGTRF)’s results could be capped because the company just doesn’t have extra capacity to give to the iPhone 6 if demand should surpass supply.

Apple iPhone 6

Pegatron price target raised for iPhone 6

In a report dated June 11, 2014, analysts Thompson Wu and Irene Wu said they increased their target price for Pegatron Corporation (TPE:4938) (OTCMKTS:PGTRF) from NT$40 to NT$53 per share. They increased their price to earnings ratio from 10 times to 11 times because they expect the iPhone 6 ramp and launch to be solid.

The Credit Suisse team says that currently, Wall Street projects that Pegatron Corporation (TPE:4938) (OTCMKTS:PGTRF) will make 20% of the 4.7-inch iPhone 6 handsets. That’s in line with what the Credit Suisse team is expecting, although it conflicts with reports we heard last month that Pegatron will only receive 15% of iPhone 6 orders.

iPhone 6 estimates

The Credit Suisse analysts are estimating that Apple Inc. (NASDAQ:AAPL) will need about 30 million iPhone 6 handsets this year. Assuming Pegatron Corporation (TPE:4938) (OTCMKTS:PGTRF) does get the 20% they expect, they say that this amount will fully utilize Pegatron’s handset capacity, thus limiting upside to the company’s results for the second half of this year. They say that if demand for the iPhone 6 is stronger than they think it will be, the extra orders will go to Hon Hai Precision Industry Co., Ltd (OTCMKTS:HNHPF) (TPE:2317) instead of Pegatron.

They note that Pegatron Corporation (TPE:4938) (OTCMKTS:PGTRF)’s handset capacity is only about 40 million to 42 million smartphones and that Asus guided for between 5 million and 10 million smartphone shipments with 100% of them coming from Pegatron. If Asus comes in at the top end of that estimate, there won’t be room for Pegatron to take on extra iPhone 6 orders.