Pegatron Corp (和碩), one of Apple Inc’s iPhone assemblers, is to expand the production capacity of its plant in Kunshan, China, in the next two years to meet rising demand from its clients.
“Hypothetically speaking, if the Kunshan plant has 10,000 workers at the moment, the number would double next year and then quadruple the year after that,” Pegatron chairman Tung Tzu-hsien (童子賢) told reporters on the sidelines of the 2015 IT Month opening ceremony in Taipei.
IT Month, an annual fair, is to run through Sunday in Taipei, then move on to Taichung from Dec. 11 to Dec. 16, to Kaohsiung from Dec. 24 to Dec. 29 and to Tainan from Jan. 8 to Jan. 13.
Photo: Chang Chia-ming, Taipei Times
Pegatron has allocated US$300 million for capital expenditure this year, mainly focusing on building new plants in China. The company is yet to finalize its capital expenditure plan for next year yet.
The Kunshan plant previously assembled older-generation iPhones, but Pegatron moved some of the new iPhone production lines from its Shanghai plant to Kunshan this quarter in a bid to ease the burden on the Shanghai plant, according to sources familiar with the matter.
Tung said that the two-year expansion plan for the Kunshan plant would not necessary involve the same product line, adding that if a strong demand for the product does not materialize in the market, Pegatron would adjust its product lines.
When asked if demand for the iPhone 6S is weaker than last year’s iPhone 6, Tung said: “The market is focusing too much on the new model and ignores the fact that the combined demand for new and previous models has not declined.”
“Let us not forget that the demand for the iPhone 4S was still very strong when the iPhone 5 hit the market,” Tung said, adding: “I could only say the situation now is quite similar. Overall, Pegatron has seen the combined orders for new and old iPhone models grow significantly from last year,” he said.
Pegatron chief financial officer Charles Lin (林秋炭) on Nov. 9 told investors that revenue this quarter is expected to jump 30 percent from last quarter’s NT$311.84 billion (US$9.5 billion) and reach a peak for this year.
CIMB Securities Ltd forecast Pegatron’s revenue would grow more than 35 percent quarterly this quarter, thanks to strong smartphone orders from Apple and Asustek Computer Inc (華碩), as well as contribution from new notebook computer models.
Moreover, being the sole assembler for Microsoft Corp’s Surface Pro 4 tablet and the Surface Book laptops, the income from the two products might contribute about 5 percent to Pegatron’s revenue this quarter, CIMB said in a note on Nov. 10.
In the first 10 months of this year, Pegatron’s revenues totaled NT$976.58 billion, increasing 24.12 percent from the same period last year.
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