Race for iPhone contracts

Manufacturers from around the world are racing to secure building contracts for the iPhone, according to one report. iPod sales rose to 21 million in the last quarter, and the iPhone is heralded by many as Apple's next big success, according to The Times. The winners of current contract competitions may fall into 'guaranteed' income from both Apple and other clients, attracted by prestige. Research from iSuppli suggests that one of the main frontrunners in the competition is Hon Hai, which already assembles the iPod nano. Likewise, Samsung is a strong contender for continuing NAND memory production, and British company Wolfson may resume producing audio chips.

Other contenders identified by iSuppli include Catcher Technology which is expected to build the casing; Micron, which could contribute the two-megapixel camera; and CSR, specialists in Bluetooth chipsets. Marvell is a likely supplier of the iPhone's 802.11 wireless connectivity, but one of the more unusual competitions exists for the CPU contract. Despite Intel's edge as the core of modern Macs, the company is still in the running against Renesas, a Japanese maker that may be more familiar with compact devices.

Analysts warn, however that an iPhone contract may not signify instant riches. iSuppli believes that despite selling for $600, the product may actually cost just $280 to build, with the most expensive part being a $70 memory card. That total amounts to a 50 percent-plus profit margin, which is considerably higher than most consumer electronics, says Ovum, another research group. Apple may use its dominance of the digital audio market to exert maximum pressure on suppliers.

by MacNN Staff