Apple partner Pegatron is increasing its staff by 40%, fueling rumors that a cheaper iPhone is coming

Rumors of an upcoming ‘cheaper’ iPhone have gained momentum today after Pegatron, one of Apple’s key component suppliers, told Reuters of its plans to increase its workforce by 40 percent in the second half of 2013.

The Taipei-headquartered company — which previously ran into trouble over environmental issues at its China-based factories — currently has a staff of 100,000, but senior executives revealed that a further 40,000 are set to join the latter half of the year.

Furthermore, Pegatron CFO Charles Lin announced that the company is expecting to see 60 percent of its 2013 revenue to come from the second half of the year. In the same vein, CEO Jason Cheng told investors that income from ‘communications products’ would account for 40 percent of Pegatron’s revenues in the second half of the year, up from 24 percent in the first quarter of 2013.

Hiring sprees and income rushes are not uncommon ahead of new Apple products, and the news gives further credence to the suggestion that Apple will launch a new iPhone model in the third quarter of this year.

Going beyond that, however, Reuters cites sources that claim early production of panels for a ‘cheaper’ iPhone model will begin this month, ramping up to full production in June. That, it claims, suggests that Pegatron is working on the new ‘budget’ device, which it says will target “lower income buyers in growth markets like China”.

While it is preparing for a busy period, the company — which was spun out of Acer — is predicting a poor second quarter. Bloomberg reports that a drop in iPad mini sales is excepted to see the manufacturer’s revenue during the three-month period reduce by up to one third on the previous quarter.

Pegatron also produces components for Microsoft’s Surface tablets, among other devices. While its executives declined to comment on speculation about a cheaper iPhone, they did reveal that there are new computers powered by Intel’s upcoming Haswell processor slated to launch this year.

Apple is continuing to see growing revenue from China — second quarter 2013 revenue from the country rose 8 percent year-on-year to $8.2 billion, accounting for 18.8 percent of its worldwide income — but, despite its financial success, the iPhone holds an estimated 11 percent market share. That’s some way down on its position in western markets and places it behind Samsung (17.7 percent market share) which is growing at a fast clip in China.

The Korean firm tripled its smartphone sales in the country in 2012, according to research from Strategy Analytics, which resulted in it topping the industry in the country for the first time.

Samsung is also said to be rivalling the iPhone in trend-setting markets in Asia, and its breadth and choice of devices at numerous price points is one of the keys to its success in Asia and beyond. Given its rival’s growth and Apple’s well-known global brand, watchers have long made the case for a cheaper iPhone and the potential it could have in China and other emerging markets.

We’re keeping our eyes peeled for any other indicators or hints at the possible launch of a lower priced iPhone. At this point — like most future Apple products — it is all speculation.

Headline image via Feng Li/Getty Images