Pegatron may Gain Orders for 50% of the 2015 4.7" iPhone 6S
A new report from China states that a rumor has surfaced that Taiwanese contract manufacturer Pegatron could get as much as 50% of Apple's next generation 4.7 inch iPhone 6S orders in 2015 as Apple continues to diversify its supply risk.
The rumor, which actually began with a European Brokerage firm sending a note to their clients, states that "For the next product cycle, iPhone 6S, likely out in September 2015, we believe for the first time in the iPhone history, Pegatron will become the main source for assembly, with more than 50% of the 4.7-inch allocation."
Apple changed its outsourcing strategy after Tim Cook took over as CEO in 2011, when the iPhone maker began to increase supply partners to reduce supply risk and gain leverage in pricing negotiations, the firm said in the note.
Because iPhones are very difficult to assemble due to their complexity, Apple's contract manufacturing partners tend to lose money in the first one or two years of their iPhone business until their yield rates improve, according to the brokerage.
Apple first chose Pegatron to start assembling the iPhone 4S in 2012, then gradually expanded Pegatron's orders to the iPhone 5C in 2013 and iPhone 6 in 2014, the brokerage said, adding that the vendor currently churns out 30% of the 4.7-inch iPhone 6.
Taiwan-based Hon Hai Precision Industry, also known as Foxconn Technology Group, has received 70% of the orders for the 4.7-inch iPhone 6 and all of the orders for the 5.5-inch iPhone 6 Plus this year.
While rumors from Brokerage Houses have to put into perspective, the fact is that the unnamed Brokerage firm is raising Pegatron's target price from US$2.41 to US$2.83 showing confidence in the company gaining these orders.
Further, with Foxconn adding a new iPhone plant for Q2 2016 production, it may be that Apple is planning well ahead for the iPhone 7's production in the hopes of closing the bottlenecks that they've experienced with the current production iPhone 6, and more particularly, the iPhone 6 Plus. Getting Pegatron up to speed on the iPhone 6S will help them prepare for iPhone 7 orders in 2016.
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