See the update at the bottom of this article.

Apple supplier Pegatron is rumored to be increasing its China-based workforce by 40 percent in the second half of the year, in a move which potentially suggests that an anticipated low-cost “budget” iPhone handset is about to enter its mass production stage of development.

The news reached us from Reuters, who goes on to note that according to Pegatron’s chief financial officer Charles Lin, 60 percent of the company’s 2013 revenue is expected to come from work undertaken in the second half of the year. Lin declined to comment, however, on whether this portion of Pegatron’s revenue would be the result of a low-cost iPhone production deal.

Reuters continues:

“Making the cheaper iPhone will further help Pegatron’s operating margin because its plastic casing is easier to make than iPhone 5′s metal casing; this should ensure a good yield rate,” said Fubon Securities analyst Arthur Liao.

Apple’s anticipated low-cost iPhone is expected to feature a polycarbonate body, and recent analysis has suggested that the “budget” smartphone could capture up to 11 percent of the low-cost handset market as early as 2014, if launched in fall, as expected.

In addition to the above, Pegatron also noted recently that demand for the iPad mini has declined, leading the company to forecast a drop in revenue of between 25 and 30 percent for the second fiscal quarter of 2013. With an updated iPad mini potentially equipped with a Retina display expected to launch later this year, it’s no surprise that consumers aren’t rushing out to purchase the first-generation small-size tablet.

Let’s just hope Apple doesn’t disappoint with its forthcoming products.

Update.

Following the publication of this piece, Pegatron’s CEO Jason Cheng has refuted Bloomberg’s report concerning waning iPad mini demand, and claimed that during the interview he “did not say anything associated with any specific products.”

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