According to China’s EDN (via Digitimes), Apple has hired Compal Electronics as a second Apple Watch manufacturer to boost production capacity as Apple has ‘an optimistic sales outlook for the device’. The report claims that Compal Electronics will produce Apple Watch Series 1 and Apple Watch Series 2 units in their factory in Kunshan, eastern China, accounting for between 20% to 30% of global Apple Watch shipments.
Up until now Quanta Computer had an exclusive manufacturing agreement with Apple to produce their wearable however that appears to of been broken as the company forecasts strong growth and high demand from consumers.
By brining Compal Electronics into the picture the report claims that Apple will use this to increase their bargaining power with Quanta Computer, A bigger factor is likely reducing risks: Apple likes to have multiple suppliers for its products so that it is not dependent on single sources of either components or assembly.
Compal Electronics will produce Apple Watch and Apple Watch Series 2 to account for 20-30% of total shipments initially and is setting up assembly capacity at its factory in Kunshan, eastern China. Compal will begin shipments as early as the fourth quarter of 2017.