Pegatron Making the iPhone 5C: Do the Rumors Add Up?

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Two suggestions with whopping numbers attached to them suggest that Pegatron may be working on a low-cost iPhone — now frequently dubbed the iPhone 5C — for Apple (NASDAQ:AAPL), The Wall Street Journal reports. Though lips are sealed about concrete facts, the rumors are adding up.

Pegatron has been suffering with the decline of the personal computer industry. A large share of its business still comes from manufacturing computers, and as sales of the devices slow, so does the business of Pegatron. The manufacturer’s second quarter saw net profit decline 28 percent year on year thanks to PCs.

Apple may be in a similar boat, though one with a slightly different shape. Rather than seeing a reduction in PC sales — which is assuredly a concern of Apple’s, though a smaller one — the iPhone maker has to contend with the slowing high-end smartphone market.

Both Apple and Pegatron have a market to consider looking away from. For Pegatron, it’s the PC market; for Apple, the high-end smartphone market. The natural place for them to both look is the low-cost smartphone market.

Apple has been hush-hush about any plans to make a low-cost iPhone. However, a number of leaked photos and videos seem to be showing what could be the anticipated Apple device. It has also been suggested that Apple and Pegatron will be working on more products together in the future.

One of the key statistics suggesting that Pegatron may be working on a low-cost iPhone came when the company gave a forecast on sales. The company said third-quarter sales would be up between 40 percent and 50 percent over the second quarter. The kind of growth doesn’t seem likely to be coming from the PC market, and may not be coming from the high-end smartphone market, either.

The low-cost smartphone market is a logical explanation. According to The Wall Street Journal, analysts pegged a low-cost iPhone as being capable of generating up to 40 percent of Pegatron’s revenue in the third quarter.

So, it seems Pegatron thinks it can up its sales by more than 40 percent, and analysts think it can up its revenue by a similar amount with the low-cost iPhone. The similarity between the two figures may be more than coincidence for those eager to know everything about the iPhone 5C.

Of course, neither Apple nor Pegatron are confirming the phone — but that could also be one of the best hints that the device is happening.

Follow Mark on Twitter @WallStMarkSheet

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