Apple supplier Pegatron boosts China workforce by 40 percent in second quarter
(Reuters) - Pegatron Corp, an assembler of Apple Inc's iPhone and iPad, said it would increase its number of workers in China by up to 40 percent in the second half of the year, fuelling market speculation of a new cheaper iPhone.
Context & Ripple Effects
Pegatron has been building toward this ramp for two years: back in July 2011 it took orders for 15 million iPhone 5s, its first major slice of Apple assembly work behind incumbent Foxconn. A month ago, Foxconn stepped up its own hiring as Apple readied a new iPhone — so two assemblers are now adding headcount in the same quarter.
First-order effects
- Pegatron says it will grow its China workforce by up to 40 percent in the second half of 2013, putting thousands of new assembly workers in place ahead of Apple's expected fall product cycle.
- The hiring confirms Pegatron is scaling from secondary supplier toward co-primary assembler, directly expanding its share of iPhone and iPad volumes at Foxconn's expense.
Second-order effects
- Foxconn faces a second credible assembler bidding for Apple volume, weakening the leverage its near-monopoly on iPhone assembly once gave it over pricing and terms.
- Component and display suppliers gain a second large customer ramping in the same window, tightening capacity in the run-up to launch and giving buyers like Apple more sourcing alternatives.
Third-order effects
- If both ramps hold, Apple's assembly base structurally shifts from one dominant partner to a multi-supplier model, with contract-manufacturer hiring data becoming a market-read proxy for unannounced products — the cheaper-iPhone talk around this 40 percent figure is exactly that trade, though the device itself remains unconfirmed.
The trend: Contract-manufacturer hiring cycles are becoming the market's earliest signal of Apple's unannounced hardware, even as Apple deliberately splits assembly across competing suppliers.