Hon Hai Wins Apple Contract for 11 Million 3G iPhones

According to Dow Jones Newswires, Taiwan’s Hon Hai Precision Industry Co has secured an exclusive contract to assemble a ‘more advanced version of iPhone.’ Apple, like Dell and many other consumer electronics companies,  outsources manufacturing projects to  China, Taiwan, and other countries.

A Hon Hai official, who declined to be named, said Hon Hai would be producing next- generation iPhones for Apple and is the exclusive contract manufacturer for the new phones. The Hon Hai official declined to provide further details.

According to Google Finance, Hon Hai Precision Industry Co employs 508,000 employees and  Foxconn Technology Group is the official trade name of the company.  The company’s web site features 2006 “Apple’s Audit Report” that looked into allegations of poor working and living conditions at a manufacturing facility in China where iPods are assembled.

The Company’s web site also contains special section titled ”Official Responses to Market Rumors,” but no Apple Inc is mentioned in any of these responses.

Foxconn is one of the largest manufacturers of electronics and computer components worldwide, and mainly manufactures on contract to other companies. Among other things, Foxconn produces the Mac mini, the iPod and the iPhone for Apple Computer; Intel-branded motherboards for Intel Corp.; various orders for American computer retailers Dell, Inc. and Hewlett Packard; the PlayStation 2 and PlayStation 3 for Sony; the Wii for Nintendo;the Xbox 360 for Microsoft, cell phones for Motorola, and Amazon Kindle.

Apple plans to sell 10 million iPhones in 2008, and some analysts speculate that the new iPhones could be in the market as early as May.

Bank of America analyst Scott Craig has been quoted as saying that Apple’s plans are to build some 11 million iPhone units - three million in the quarter starting May and another eight million in the third quarter.

“Our iPhone estimates are starting to look too conservative at 8 million units during 2008,” Bank of America’s Scott D. Craig wrote in a Friday report.

Craig said that now he expects production volume to be much higher than his previous estimate of 8 million iPhone units. He said Apple planned to build more than 3 million high-speed iPhones in May followed by more than 8 million in the third quarter of the year. “Our latest channel checks point to a significant production build of a 3G iPhone beginning in the month of June after an initial small build in May,” he said.

Every additional 1 million devices sold will generate an extra $400 million, or 12 cents a share, in annual profit for Apple, Craig wrote. The 3G iPhone will probably be announced next quarter, he said.

Apple’s order patterns are typically overestimated by the company, largely to keep component suppliers fully stocked should demand take off.