Pegatron CEO says Apple’s budget iPhone won’t be ‘cheap’

Budget iPhone (Nickolay Lamm and Matteo Gianni teaser)

Speaking at his company’s shareholders meeting on Thursday, Pegatron CEO T.H. Tung made some interesting comments on Apple’s often rumored ‘budget iPhone.’ He said don’t expect the handset to be inexpensive, as the “price [on it] is still high.”

For those unfamiliar with Pegatron, it’s a manufacturing company and one of Foxconn’s biggest rivals. The CEO’s comments seem to confirm earlier reports that Apple has chosen the company, over Foxconn, as its primary budget iPhone maker…

Japanese blog Macotakara (via AppleInsider) points to Tung’s comments in a report by the China Times. The news outlet says that the executive told investors today that products currently on the market can carry a number of names, but “cheap” is not how he would describe the low cost iPhone. He went on to say that smartphones are increasingly offering more value for the money.

This isn’t the first time that we’ve heard Apple’s budget handset characterized as “not cheap.” Last month, AllThingsD shared a note from analysts Gokul Hariharan and Mark Moskowitz saying they felt Apple’s low cost iPhone could come in at $350.

“We believe Apple could take 20-25 percent of this market in the next 12 months (from almost no market share currently), if it prices a lower-priced product at $350-400 levels.”

And I don’t think it would surprise anyone to see Apple price its so-called low end iPhone at $350 or higher. Apple doesn’t typically undercut its competitors on price. Just look at the iPad mini—people thought Apple was nuts for starting it at $329.

I think this comment Tim Cook made while speaking at this year’s Goldman Sachs Technology and Interactive Conference sums it up best:

Our North Star is making great products. We wouldn’t do anything that’s not a great product. It’s not why we’re on this earth.

We wouldn’t do anything we don’t consider to be a great product. That’s just not who we are. That said, if you look at what we’ve done for people who are price sensitive, we’ve lowered the price of the iPhone 4 and 4S as of last September, and last quarter we didn’t have enough supply of the iPhone 4. It surprised us.

Also take a look at the history of iPod. When we started, it was $399. Now you can get an iPod shuffle for $49. Rather than cheapening, we build new products with a separate experience.”

There’s been a lot of talk about Apple offering a budget iPhone in recent months. Just last week, Reuters ran a report claiming that it was on track to release the cheaper handset this fall alongside its iPhone 5S, and test production was going to start in July.

As for the phone itself, it seems like we have a pretty good idea of what it’s going to look like. It’ll be shaped like the iPhone 5, with the curved corners and other elements of the iPod touch. And several reports have said it’s going to come in a variety of colors.

There’s obviously no way to know for sure, but many industry insiders and pundits are expecting Apple to launch the low cost handset alongside a new flagship iPhone, the 5S, and two new tablets this fall. Like last year, it’s going to be a busy holiday season.