Apple Inc. (AAPL) To Add Assembly Partners Next Year [REPORT]

iphone 8 apple stockElisaRiva / Pixabay

Apple Inc. (NASDAQ:AAPL) is expected to add to its assembly suppliers next year as the tech giant is set to launch multiple flagship products every year, according to analysts at Citi Research.

Wei Chen and Winnie Hong, analysts at Citi Research in Taiwan projected that Compal/Winstron will become new assembly partners of Apple Inc. (NASDAQ:AAPL) by 2014/15, and casing companies Catcher Technology Co., Ltd. (TPE:2474) and Ju Teng International Holdings Limited (HKG:3336) will benefit from the addition.

According to the analysts, Hon Hai Precision Industry Co., Ltd. (TPE:2317) also known as Foxconn accounts 2% to 3% OPM from iPhone and iPad orders, but believed that the assembly margin represents only 1%. The supplier generates the remaining percentage from component vertical integration such as unibody metal casing, camera modules, and different connectors/cables.

Chen and Hong suggested that Hon Hai Precision Industry Co., Ltd. (TPE:2317) could lose its share of iPhone and iPad assembly orders to Winstron/ Compal, and there is a possibility that the two companies will not source components from Hon Hai, instead from Catcher Tech because it is a qualified casing supplier for Apple Inc. (NASDAQ:AAPL).

They believed that Ju Teng would also benefit from Winstron or Compal over the long-term. Although the company is not yet a casing supplier for the tech giant, the analysts projected that it might receive casing orders for the iPhone 5C if the assembly orders are given to Winstron or Compal.

Apple decides to add its assembly suppliers

Chen and Hong identified several implications to the tech supply chain in Taiwan once Apple Inc. (NASDAQ:AAPL) decides to add its assembly suppliers for iPhone and iPad next year. According to them, them the biggest winners among the tech supply chain in the country will be Catcher Tech and Ju Teng.

Hon Hai will lose shares in previous generation (N-1) products, but it will remain as the leading assembly supplier for flagship products such as the iPhone 6 and iPad Air.

Pegatron Corporation (TPE:4938) is expected to maintain its share in iPhone and iPad while Compal/Winstron would gain share in previous generation models such as iPhone 5C, iPhone 5S, and iPad Mini. However, the analysts perceive uncertainty in execution risk and monetization strategy from the potential new assembly suppliers.

Apple needs to works with more suppliers

Chen and Hong emphasized that Apple Inc. (NASDAQ:AAPL) needs to works with more suppliers as it continues to launch more products. They noted that the tech giant moved from launching one flagship product (iPhone 5) to two (iPhone 5C and iPhone 5S) per year.

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About the Author

Marie Cabural
Marie received her Bachelors Degree in Mass Communication from New Era University. She is a former news writer and program producer for Nation Broadcasting Corporation (NBC-DZAR 1026), a nationwide AM radio station. She was also involved in events management. Marie was also a former Young Ambassador of Goodwill during the 26th Ship for Southeast Asian Youth Program (SSEAYP). She loves to read, travel and take photographs. She considers gardening a therapy.

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