Apple reportedly looking to expand iPhone production to Foxconn subsidiary

Over the past few weeks, we’ve been hearing about problems within Foxconn’s production lines regarding the iPhone 5. Workers are unhappy with the complicated manufacturing procedures, and higher quality standards, and thousands have even gone on strike.

These problems are said to be one of the main factors in the iPhone 5 supply constraint Apple is seeing worldwide. It’s three weeks after launch, and the handset is still seeing shipping times of 3-4 weeks. But rumor has it that Apple is working on a solution…

Reuters passes along a report from Daiwa Capital Markets that Apple may be looking to take some of the manufacturing pressure off of Foxconn by moving some of its iPhone business to one of its subsidiary companies: Foxconn International Holdings (FIH).

“Shares of FIH, which assembles handsets for the likes of Nokia Oyj, Huawei Technologies Co Ltd and ZTE Corp, rose as much as 10.2 percent to a high of HK$3.35 in early trade, the strongest intraday level since June….

…The sharp rises were attributed to a brokerage report from Daiwa Capital Markets saying that FIH was likely to get iPhone orders soon, even though it does not currently assemble Apple products.

“Our industry research indicates that FIH is likely to start producing iPhones in late 2012 or early 2013,” Daiwa said.”

Bloomberg reported earlier this week that Apple’s move to aluminum in the iPhone 5 is the reason behind Foxconn’s woes. Reports of early adopters seeing out-of-box scratches on the handset have prompted tighter quality standards, thus lower production yield rates.

Foxconn International was expected to issue a statement this afternoon, but so far, it has yet to do so.