Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

Low-cost iPhone to be built by Foxconn rival Pegatron, reports

Karen Haslam | May 15, 2013
Pegatron offers aggressive pricing in deal that could help Apple's margins.

Foxconn's days as Apple's primary manufacturing partner may be numbered. Rival Pegatron is said to be offering more competitive pricing to tempt Apple, who is trying to increase its margins.

According to Business Insider, Foxconn gets 60-70% of its revenue from Apple contracts.

Pegatron is thought to be gearing up to be the sole assembler of the rumoured budget iPhone. Last week the company announced that it was planning to increase the number of workers in its factory by 40%.

Pegatron is able to offer aggressive pricing "because as it catches up on margins by supplying more components," Daiwa Capital analyst Birdy Lu told Business Insider.

Speaking at the recent conference call with analysts at which Apple announced its second quarter financial results, Apple CEO Tim Cook said: "We acknowledge that our growth rate has slowed and our margins have decreased from the exceptionally high level we experienced in 2012."

One of the concerns about launching a low-cost iPhone - which many claim Apple needs to do if it is to take on the emerging markets of China and India - is that it will mean that Apple's profit margins decline. The company has already seen margins reduce since it launched the iPad mini.

In addition, component costs have risen in 2013 compared to 2012, making it much more difficult for Apple to achieve the profit levels that it used to.

 

Sign up for CIO Asia eNewsletters.