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Pegatron Allegedly to Outbid Hon Hai for iPad 3 Production

2011/07/28 | By Steve Chuang

Taipei, July 28, 2011 (CENS)--After garnering Apple Inc.'s big order for 15 million units of iPhone, Pegatron Corp., a Taiwan-based contract manufacturer of electronic products, is allegedly to snap up the customer's another order for iPad 3 production, poised to shake up Hon Hai Precision Industry Co., Ltd.'s leading status in Apple's supply chain, according to industry sources.

Exclusively handling assembly of iPhone and iPad and production of related parts, Hon Hai, the world's largest electronic manufacturer by revenues, has dominated the supply chain for a time. But the status has changed this year, as Pegatron has just won Apple's contract order for iPhone 5 production.

Hon Hai is likely to turn Apple's another contract order for iPad 3 manufacturing over the Taiwanese counterpart, as the customer has considered looking for a second iPad supplier to reduce over-dependence on Hon Hai, especially at a time after an explosion accident occurred at the firm's Chengdu factory in May.

Therefore, Pegatron, having effectively integrated its production resources specifically for tablet PCs and built close partnership with Apple by supplying iPhone's CDMA edition to the customer, has been regarded as the most likely candidate for handling Apple's contract order for iPad 3.

Although intending to switch its contract order for the newest model of iPad to a second supplier from Hon Hai, industry insiders indicated, Apple is supposed not to reshuffle its supply chain. This means most of existing suppliers of iPad's parts, including TPK Holdings Ltd. (touch panels), Simplo Technology Co., Ltd. and Dynapack International Technology Corp. (battery pack modules), Largan Precision Co. (camera lens modules) and Foxconn Technology Co., Ltd. (PC housings), will remain on the supplier list.

Apple sold 20.34 million units of iPhone and 9.25 million units of iPad to finish its fiscal third quarter of 2011 (from April through June) with sales revenue of US$28.57 billion, hitting an all-time high, with gross profit rate of 41.7%. Despite the banner sales performance in the quarter, the U.S. firm, however, has projected its fiscal fourth-quarter revenue to drop 12.5% quarter-on-quarter to US$25 million for various reasons.