Apple plans new low-cost iPone: Report

In a move aimed at reducing its dependence on Chinese contract electronics colossus Foxconn, Apple has enlisted Pegatron to assemble a low-cost iPhone The Wall Street Journal, reported yesterday.

Taiwan-based Foxconn held the enviable position that allowed it to make nearly all of the California company's iPhones and iPad tablet computers. However, Apple chief Tim Cook is moving to diversify the supply chain, the newspaper said.

Taipei, headquartered Pegatron emerged a minor producer of iPhones in 2011 and started making iPad mini tablets last year, according to the report.

The newspaper cited unnamed sources that attributed the move to a plan to cut dependence on a single supplier as also a willingness by Pegatron to accept a smaller profit in return for Apple's business.

Following reports that Foxconn was looking to exit Apple's business, the iPhone maker has gone ahead and started getting out of the Foxconn business, dumping its partner on human rights issues for the production of the rumoured cheap iPhone, the report said.

Though it might appear that Apple was ditching the controversial Chinese manufacturer for the proven Taiwanese builders at Pegatron due to the high-profile labour scandal, that Apple had to put up with for a year and a half.

The paper's sources said, ''risk diversification after Foxconn's manufacturing glitches last year with the iPhone 5 that resulted in scratches on the metal casings, and Apple's decision to expand its product lines amid growing competition from Samsung Electronics Co and others".

Further, Pegatron, which was building up its presence in China, was willing to accept thinner profit margins than Foxconn, which had started to distancing itself from Apple.

Meanwhile, according to CNET, Pegatron was reportedly going on a hiring spree, with plans to hike its workforce in China by up to 40 per cent during the second half of the year, leading to suspicion that the company was equipping its factories to produce the rumoured low-cost iPhone.

Pegatron's chief financial officer, Charles Lin, declined to comment to Reuters earlier this month as to whether the company would produce a low-cost iPhone this year, but Lin said that 60 per cent of Pegatron's 2013 revenue was expected to come during the second half of 2013.

According to CNET, analyst Gene Munster was looking to a September release of a $300 non subsidised iPhone, which could bring in unit sales of 75 million next year.

The cheaper iPhone is due to go into trial production next month.