Apple Inc. (AAPL) Supplier Boosts Workforce, Hints Low-Cost iPhone

Apple Inc. (AAPL) Supplier Boosts Workforce, Hints Low-Cost iPhone
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Pegatron Corporation (TPE:4938) has increased the employee’s intake in China by up to 40 percent in the second half of fiscal 2013. Pegatron Corporation (TPE:4938) is one of the suppliers that assembles Apple Inc. (NASDAQ:AAPL)’s iPhone and iPad. The news gives more strength to the speculations of the new low priced iPhone, reports Reuters.

Apple Inc. (AAPL) Supplier Boosts Workforce, Hints Low-Cost iPhone

At present, this company has 100,000 workers. Apple Inc. (NASDAQ:AAPL) is in the process of developing a low priced model of iPhone, according to Suppliers. The new cheaper iPhone is intended to attract the low income buyers in the emerging markets such as India and China.

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According to a supplier, the small scale production of the display panel will start in May in Japan, and in June the mass production will be started for the display panels. There are speculations that Apple Inc. (NASDAQ:AAPL) will roll over its low priced model of iPhone in the third quarter.

Charles Lin who is the Chief Financial Officer of Pegatron Corporation (TPE:4938) told that the company will extract 60 percent of its revenue from the second half of the fiscal 2013. However, there were no comments from Lin if the low priced iPhone’s was one product amongst all to be manufactured in the second half of the year. Lin told that after the launch of Haswell processor, the new computer models will be launched.

Jason Cheng, President and Chief Executive Officer of Pegatron Corporation (TPE:4938) announced in an Investor conference that the contribution from communication products will be around 40 percent to total revenue in the next half starting from June, as against contribution of 24 percent in the three months, in the start of the fiscal.

The net profit of Pegatron increased 81 percent in the first quarter of 2013 compared to the previous year’s quarter profit of T$2.31 billion ($78.59). The operating margin of the company surged 0.8 percent from 0.3 percent in the previous quarter.

Analyst take

Arthur Liao, Fubon Securities analyst, said that Pegatron Corporation (TPE:4938)’s operating margin will be benefited by manufacturing cheaper iPhone’s, the reason being the plastic casing which is easier to make than iPhone metal casings. He said, “This should ensure a good yield rate”

He said that improvement in yield rate will contribute to the profits of the Pegatron compared to Hon Hai Precision Industry, the major supplier to Apple Inc. (NASDAQ:AAPL).

According to a report from RBC Capital, a couple of months back, the low cost iPhone will have a 4-inch screen like the iPhone 5 and will have a plastic casing rather than the metal casing. There are expectations that a low cost iPhone could contribute $22 billion in revenue for Apple Inc. (NASDAQ:AAPL).

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