Feature Article

May 09, 2013

More Hints of Cheaper iPhone as Pegatron Plans to Boost Workforce by 40 Percent

Apple's moves to up its workforce in China have been fueling speculation that a new iPhone is in the works – and one that could be more affordable than past offerings.

Pegatron Corp, an assembler of Apple Inc's iPhone and iPad, announced that it will be massively increasing its number of employees in its China base. Currently, Pegatron employs roughly 100,000 people.

It says it will raise the number by up to 40 percent in the second half of 2013. Currently, Pegatron employs 100,000 people.

Suppliers have informed Reuters that Apple is, in fact, developing a cheaper model of the phone. This will of course extend the company's sales base to lower-income buyers in growth markets such as India and China.

One supplier source in Japan reported that small-scale production of the display panel for the model would begin in May.

Mass production of the cheaper model would ensue in June, and an official launch of the new iPhone is anticipated for the third quarter of the year.

Clearly something big is in the works, as Pegatron's chief financial officer, Charles Lin, told Reuters that 60 percent of the company's 2013 revenue would come from the second half of the year.

Lin declined to comment on whether the cheaper iPhone was among the new products to be made in that time, though he did mention new computer models following Intel's launch of the new Haswell processor.

Jason Cheng, the president and chief executive officer of Pegatron, spoke at an investor conference on Wednesday and divulged that revenue from communication products would contribute up to 40 percent to total in the six months from June, compared to 24 percent in the three months in the beginning of the year.

Manufacturing a comparatively inexpensive iPhone would certainly be in Pegatron's best interest.

Fubon Securities analyst Arthur Liao says that the move would help Pegatron's operating margin “because its plastic casing is easier to make than iPhone 5's metal casing; this should ensure a good yield rate.”

Edited by Alisen Downey

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