updated 10:35 pm EDT, Wed April 27, 2011
Pegatron iPhone 4 builds may drop from 10m to 5m
Purported supply insiders said Wednesday night that Pegatron had been asked to dramatically scale back its production of CDMA iPhone 4 models. The Taiwan supplier had originally been tasked with making 10 million but was said to have been given a "significant reduction" in orders that would cut that number down to five million. Reasons why weren't given by Digitimes' sources.
A reduction on that level would partly contradict Verizon's own public expectations during its latest fiscal results call, when it was still expecting to activate about 11 million iPhones in 2011. Demand so far for the CDMA iPhone 4 has been intense, with 2.2 million sold in winter despite missing half the quarter and launching on the carrier widely considered the global cornerstone of Android sales.
Rather than a loss of interest, the production cut might instead point to an earlier switchover to production for the next iPhone. The new model may not ship until September, but that could leave Pegatron only needing to produce iPhone 4 models for just over two quarters in 2011 before it had to start ramping up production for the replacement. Verizon's estimate may be based on expectations that sales in the last four months of the year would make up the majority of its results.
The drop, no matter the cause, may still result in relatively dampened estimates for Pegatron itself. A 20 to 30 percent spike in notebook production for the spring would be offset by a 25 to 35 percent drop in "communications products," mostly revolving around phones. Pegatron would still see a 10 percent revenue increase, though only after a $19.38 million loss in the winter.