Nov. 6, 2013 6:18 a.m. ET
HONG KONG— Apple Inc. AAPL -0.25% Apple Inc. U.S.: Nasdaq $525.45 -1.30 -0.25% Nov. 5, 2013 4:00 pm Volume (Delayed 15m) : 9.35M AFTER HOURS $525.74 +0.29 +0.06% Nov. 5, 2013 7:58 pm Volume (Delayed 15m): 131,492 P/E Ratio 13.17 Market Cap $473.94 Billion Dividend Yield 2.32% Rev. per Employee $2,127,850 11/06/13 Apple Adds Suppliers to Boost ... 11/05/13 Review of Nexus 5 Smartphone 11/04/13 Apple Enters Pact With GT Adva... More quote details and news » is adding new contract manufacturing partners in Asia to boost production of its smartphones and tablets, people familiar with the supply chain said, as the technology company tries to ensure adequate supply to meet consumer demand.
Later this year, Apple will outsource manufacturing of the cheaper version of its latest iPhone, the iPhone 5C, to Wistron Corp. 3231.TW -1.12% Wistron Corp. Taiwan NT$26.50 -0.30 -1.12% Nov. 6, 2013 2:46 pm Volume : 8.94M P/E Ratio 9.18 Market Cap NT$65.63 Billion Dividend Yield N/A Rev. per Employee NT$10,949,500 11/06/13 Apple Adds Suppliers to Boost ... 10/23/13 HTC Weighs Outsourcing Smartph... More quote details and news » , a Taiwan-based contract maker that currently produces smartphones for BlackBerry Ltd. BBRY +2.69% BlackBerry Ltd. U.S.: Nasdaq $6.67 +0.17 +2.69% Nov. 5, 2013 4:00 pm Volume (Delayed 15m) : 31.76M AFTER HOURS $6.64 -0.03 -0.45% Nov. 5, 2013 7:59 pm Volume (Delayed 15m): 153,014 P/E Ratio N/A Market Cap $3.40 Billion Dividend Yield N/A Rev. per Employee $792,598 11/04/13 BlackBerry Analysts Cut Target... 11/01/13 Cerberus, Qualcomm in Talks to... 10/29/13 BlackBerry Met With Facebook L... More quote details and news » and Nokia Corp. NOK1V.HE +1.65% Nokia Corp. Finland: Helsinki €5.87 +0.10 +1.65% Nov. 6, 2013 1:25 pm Volume : 7.80M P/E Ratio N/A Market Cap €21.65 Billion Dividend Yield N/A Rev. per Employee €274,321 11/04/13 Nokia, Samsung Extend Patent D... 10/31/13 India Antitrust Body Approves ... 10/30/13 India Antitrust Body Approves ... More quote details and news » , the people said. Apple also plans to add Compal Communications Inc. 8078.TW +0.40% Compal Communications Inc. Taiwan NT$50.70 +0.20 +0.40% Nov. 6, 2013 2:46 pm Volume : 1.59M P/E Ratio N/A Market Cap NT$30.63 Billion Dividend Yield 2.37% Rev. per Employee NT$4,551,190 11/06/13 Apple Adds Suppliers to Boost ... 10/01/13 Compal Electronics to Buy Out ... 10/01/13 Compal Electronics to Buy Out ... More quote details and news » to assemble its iPad Mini tablet starting next year, the people said.
Apple is broadening its supplier base as its main assembler, Hon Hai Precision Industry Co. 2317.TW +1.09% Hon Hai Precision Industry Co. Ltd. Taiwan NT$74.40 +0.80 +1.09% Nov. 6, 2013 2:46 pm Volume : 19.52M P/E Ratio 9.77 Market Cap NT$971.52 Billion Dividend Yield 2.02% Rev. per Employee NT$2,881,260 11/06/13 Apple Adds Suppliers to Boost ... 10/31/13 Hon Hai Makes Push Into Softwa... 10/16/13 Apple Cuts iPhone 5C Orders More quote details and news » , is focusing on producing the high-end iPhone 5S, which is currently in short supply, the people said. Hon Hai, also known as Foxconn, has also been under scrutiny for its labor practices, creating a headache for Apple, they said. According to J.P. Morgan analyst Alvin Kwock, the high return rate of defective iPhone 5 smartphones also led to tensions between Apple and Hon Hai over which company would be responsible for repair-work costs.
Apple declined to comment on the manufacturing and labor issues.
"Hon Hai Chairman Terry Gou is not willing to cut contract prices substantially to get more orders from Apple. Hon Hai is also aware of the risk of building gigantic production capacity for a single customer so it is adopting a more cautious stance on expanding production," said a Hon Hai executive, who declined to be named.
Hon Hai's fortunes have largely hinged on Apple because about 40% of its revenue comes from the Cupertino, Calif.-based company. Its operating margins have been under pressure over the past year due to high labor costs and a slowdown in revenue growth.
"Apple has raised this quarter's iPhone 5S orders from Hon Hai as demand has been stronger than expected. But it takes time to boost production capacity and Apple can't find other assemblers to increase production to meet demand immediately," said the Hon Hai executive.
Analysts said Apple's product portfolio is getting more complicated and it makes sense for the company to add more assembly partners, including Wistron and Compal. Having a broad supply chain will be key to competing in the fast-moving mobile-devices market where Apple is seeing rising competition from Samsung Electronics Co. 005930.SE -2.29% Samsung Electronics Co. Ltd. S. Korea: KRX KRW1451000 -34000 -2.29% Nov. 6, 2013 3:00 pm Volume : 244,368 P/E Ratio 7.86 Market Cap KRW244525.65 Billion Dividend Yield 0.07% Rev. per Employee N/A 11/06/13 Heard on the Street: Samsung P... 11/06/13 Samsung Lifts Dividend But Kee... 11/05/13 Samsung Opens Itself to Invest... More quote details and news » and other vendors that make devices using Google Inc. GOOG -0.45% Google Inc. Cl A U.S.: Nasdaq $1021.52 -4.59 -0.45% Nov. 5, 2013 4:00 pm Volume (Delayed 15m) : 1.15M AFTER HOURS $1021.75 +0.23 +0.02% Nov. 5, 2013 7:59 pm Volume (Delayed 15m): 32,151 P/E Ratio 28.96 Market Cap $342.81 Billion Dividend Yield N/A Rev. per Employee $1,059,710 11/06/13 Google Uses Kittens to Make it... 11/05/13 Samsung Opens Itself to Invest... 11/05/13 How BlackBerry Can Wean Itself... More quote details and news » 's Android operating system.
Wistron, a Taipei-based computer and smartphone contract manufacturer, is scheduled to start mass producing the iPhone 5C later this year, joining Hon Hai and Pegatron Corp. 4938.TW 0.00% Pegatron Corp. Taiwan NT$41.00 0.00 0.00% Nov. 6, 2013 2:46 pm Volume : 4.59M P/E Ratio 12.06 Market Cap NT$95.54 Billion Dividend Yield 3.61% Rev. per Employee NT$5,173,430 10/16/13 Pegatron Outlook Murkier As Ap... 10/04/13 Taiwan Is Nexus for Informatio... 09/11/13 For Apple's Suppliers, A Quest... More quote details and news » , the people said. Compal Communications will likely start manufacturing the iPad Mini next year, the people said.
Taiwan-based Compal Communications, which also makes tablets for Lenovo Group Ltd. and smartphones for Nokia and Sony Corp., has also reserved a plant to produce iPhones in China next year even though Apple hasn't yet placed orders, said a person familiar with the situation.
Write to Lorraine Luk at lorraine.luk@wsj.com
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