Pegatron ramping up hiring for budget iPhone production?

Budget iPhone (Nickolay Lamm and Matteo Gianni concept 004)

Just a day after contract manufacturer Pegatron warned investors its second-quarter earnings could drop up to 30 percent due to softening demand for iPad mini, other tablets, e-books and games consoles comes word that the company has ramped up hiring as it needs an additional 40,000 workers on top of its existing 100,000 employees.

The 40,000 additional workers are needed to presumably assemble a rumored less-price iPhone model for Apple, Reuters speculated Thursday, reiterating it heard from suppliers that Apple is indeed “developing a cheaper model of the phone” in order to broaden its sales base to lower-income buyers in growth markets such as China and India…

The Reuters report also quotes a supplier source in Japan who claimed that “small-scale production of the display panel” for the budget iPhone would begin in May, ramping up to mass production in June.

This matches up perfectly with a recent report from Nikkan asserting that production of screens for Apple’s upcoming iPhone refresh will begin in June, with Apple procuring display panel components from Sharp, LG Display and Japan Display, but not Samsung.

Notably, said suppliers also provide screens for the iPhone 5.

Reuters writes that Apple is expected to launch the budget iPhone in the third quarter of this year. Barclays Capital back in January claimed that both Foxconn and Pegatron will get to assemble the budget iPhone and the iPhone 5S this year.

Taiwan-based newspaper Commercial Times confirmed Barclays’s claim two months later with its own sources that Apple indeed had commissioned Pegatron to build the less-pricey iPhone that the Wall Street JournalBloombergReuters and other high-profile publications insist is in the works.

Additionally, industry publication DigiTimes wrote in December 2012 that Apple is adjusting its order strategy to outsource the minority of iPhone orders to Pegatron for the next three years.

The reliable KGI Securities analyst Ming-Chi Kuo wrote in a March note to clients that Apple tapped Pegatron to build a majority of budget iPhone orders and more than half of all iPhone 4/4S orders.

KGI Securities (Pegatron vs Foxconn orders)

Pegatron’s finance chief told the news gathering organization that as much as 60 percent of its 2013 revenue would come from the second half of 2013.

Aside from new computer models using Intel’s Haswell processors, the firm has not attributed the expected revenue rise to any particular order and has declined to comment whether that revenue might come from the budget iPhone.

Even more telling, Pegatron told investors that revenue from communication products would contribute up to 40 percent in the six months from June, up from 24 percent in first quarter of 2013.

Pegatron assembles Apples’ iPhone 4S and iPad mini, but also consumer electronics for other clients, including Surface tablets for Microsoft and computers for Hewlett-Packard.