Apple may be working on iPhone for Verizon: report

A customer tries out the new iPhone 3GS on the first day it is being sold at the Apple Store in Zurich June 19, 2009.

HONG KONG/SAN FRANCISCO (Reuters) - A subsidiary of Taiwan netbook PC pioneer Asustek has won orders to manufacture Apple's iPhone to run on the CDMA standard, a source said on Tuesday.

Apple is said to be developing a CDMA-compatible iPhone that would work on leading U.S. mobile carrier Verizon Communications Inc's network, the Wall Street Journal had reported earlier, citing people familiar with the matter.

The Taiwan firm, Pegatron, will begin shipping the phones from next year, said the source close to Pegatron, who declined to be named as the plans were not yet public. The source could not confirm if the products would be for Verizon's network.

"Pegatron's been manufacturing on behalf of Apple for a while now," said the source, noting Pegatron products include the iPod Shuffle music player.

Pegatron declined to comment.

Shares in Asustek rose 0.4 percent on Tuesday in a broader Taiwan market up 0.2 percent. Asustek has said it will spin off Pegatron in June, with the unit expected to list around then.

Verizon shares had jumped 3.4 percent in after-hours trade, while AT&T Inc, the current exclusive carrier of the iPhone in the United States, fell 2.2 percent.

An Apple spokeswoman said the company does not comment on speculation. Verizon also declined to comment.

ANOTHER SUMMER, ANOTHER IPHONE

Apple has released a new iPhone model every summer for the past three years and is widely expected to do so this summer.

But a CDMA-compatible iPhone may come later in the year, the Journal report suggested.

Asked about the report, an AT&T spokesman said: "We have a great relationship with Apple and we don't comment on the specifics of that relationship." AT&T repeated previous comments that the iPhone "will be an important device for us for quite some time."

Broadpoint Amtech analyst Brian Marshall said it was "only a matter of time" before the iPhone landed with Verizon.

He said Verizon has a better network than AT&T and a larger customer base. Marshall expects a Verizon iPhone to happen early in 2011. Verizon has roughly 6 million more wireless customers than AT&T.

Rumors have swirled for some time about Apple launching an iPhone with Verizon. AT&T has been the sole U.S. carrier since the iPhone's debut in 2007 and some iPhone users have complained about the quality of the AT&T network.

"AT&T has known all along that its exclusive relationship with Apple would change into something else some day. From the beginning of its relationship with Apple, AT&T has factored this change into its business and technology planning," a person familiar with AT&T said.

Verizon shares rose to $31.50 from a close of $30.45, while AT&T shares slipped to $25.97 from a close of $26.51. Apple stock rose 2.3 percent to $237.65 in extended trading from a close of $232.39.

(Reporting by Kelvin Soh in HONG KONG, Baker Li and Argin Chang in TAIPEI, Gabriel Madway and Sinead Carew; Editing by Andre Grenon and Ian Geoghegan))