China Post [Thu, 25 Jul 2013] by calibre

Author:calibre [calibre]
Language: eng
Format: epub
Publisher: calibre
Published: 2013-07-25T09:37:40.792000+00:00

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This article was downloaded by calibre from http://www.chinapost.com.tw/business/global-markets/2013/07/25/384690/TAIEX-retreats.htm

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Apple to add new assemblers in '14: Credit Suisse - The China Post

The potential new assemblers for iPhones and iPads include three Taiwan-based companies — Compal Communications Inc., Wistron Corp. and Inventec Appliances Corp. — that have all tendered bids to Apple, the bank said in a note to clients on Tuesday.

Though Hon Hai Precision Industry Co. and Pegatron Corp., the companies Apple currently relies on most to assemble its many devices, may be hurt by the addition of new assemblers, the three candidates still face challenges before they do work for Apple, the bank said.

“Apple is known to have high standards qualification periods, aggressive cost-downs, high seasonality and steep order ramps for product launches, which lead to cash flow pressure through working capital change or capital structure changes,” said Credit Suisse analyst Thompson Wu.

“We believe the earliest these new EMS (electronic manufacturing services) partners will win Apple orders is in 2014,” he wrote in the note.

Hon Hai is currently the main manufacturer of Apple's iPhones and iPads, while Pegatron assembles a portion of iPad minis and has been tapped to assemble some of Apple's anticipated low-cost iPhones, according to Credit Suisse.

Local media has cited industry sources as saying that Hon Hai will make about 25 percent of the low-cost iPhones, expected to be launched in the third quarter, and Pegatron will produce the other 75 percent.

Getting Apple orders may not be as lucrative in the past, however, because the electronics vendor is expected to squeeze the prices it pays its Asian suppliers because of the recent decline in its gross margin, British banking group Barclays Plc said Wednesday in a separate research note.

Apple reported on Tuesday that its gross margin fell in the second quarter to 36.9 percent from 42.8 percent a year earlier, leading to a 20-percent fall year-on-year in earnings per share.

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