Taiwan's Hon Hai wins Apple orders for mobile handsets, notebook PCs - report
TAIPEI (XFN-ASIA) - Hon Hai Precision Industry Co Ltd (2317.TW) has secured contracts from Apple Computer for 12 mln mobile handsets that also function as music players, the Commercial Times quoted industry sources as saying.
Context & Ripple Effects
A Commercial Times report citing unnamed industry sources says Hon Hai Precision has won Apple contracts for 12 million handsets that double as music players, plus notebook PC orders — both companies have not confirmed the claims, though the story traveled fast, with The Unofficial Apple Weblog picking it up and framing the device outright as an 'iPhone' order.
The timing matters: Apple spent late 2006 clearing legal overhang around its music business, settling the iTunes interface lawsuit in September 2006 and announcing a broad settlement with Creative in August 2006, while confirmed gray-market iPod sales boomed in India — signs of strong unmet demand for music devices that a phone-capable product would address.
First-order effects
- If the reported 12-million-unit handset order holds, Hon Hai becomes the launch-scale assembly partner for Apple's first phone-capable music device, and the notebook orders extend the relationship beyond iPod-class products.
- Apple gains a single Taiwanese partner spanning two new product categories at once, concentrating its supply chain during the most anticipated expansion of its lineup.
Second-order effects
- Rival Taiwanese contract manufacturers are pushed into a bidding contest for Apple volume, compressing margins across the island's electronics-assembly sector as one customer's orders set the terms.
- Component and parts suppliers gain a second large handset customer in Taiwan's ecosystem, shifting bargaining power toward whoever locks in Apple's bill of materials early.
Third-order effects
- If brand-name consumer electronics keeps consolidating production with a small set of Taiwanese EMS firms, the assemblers rather than the brands become the structural chokepoint of the mobile-hardware industry — a pattern already visible in Hon Hai's cross-product Apple relationship.
- Convergence devices that merge music player and phone pull Apple's manufacturing base toward partners with handset-scale capacity, redrawing which suppliers matter in consumer electronics.
The trend: Consumer-electronics brands are consolidating next-generation device manufacturing with a handful of large Taiwanese assemblers as the music-player and handset markets converge.