TAIPEI, Taiwan (TheStreet) -- Apple (AAPL - Get Report) will source Apple Watch components to U.S.-traded companies from Taiwan and South Korea, analysts forecast, a catalyst for their businesses and share prices if the gadgets gain ground.
The Silicon Valley consumer electronics giant will use Taiwanese contractor Quanta Computer (QUCCF) to assemble at least the first wave of watches, high-tech research firms including IDC say. The watches, whose arrival is widely expected to be a pivotal moment in the era of wearable wireless devices, will be available April 24.
Later assembly work would go to Hon Hai Precision (HNHPF), a longtime Apple partner also based in Taiwan, or to its cross-town peer, Inventec (IVCJF), says U.K.-based tech consultancy Strategy Analytics. It predicts Apple will ship 15 million watches worldwide this year, and grab a 55% market share of similar devices.
Apple, which declined to comment for this report, would tap NYSE-traded LG Display (LPL - Get Report) for watch screens and may use another South Korean firm for memory, said Strategy Analytics global wireless practice executive director Neil Mawston.
TPK Holding (TPKCF) will make touch panels for the watch, predicts Taiwan government-backed tech research firm Market Intelligence & Consulting Institute. TPK, a decade-old Taiwanese company with its own patented touch technology, is widely reported in Taiwan to have done previous work for Apple.
The world's biggest contract chipmaker, Taiwan Semiconductor Manufacturing (TSM - Get Report), whose chairman and CEO, Morris Chang, forecast a boom in wearable electronics about two years ago, would also be a logical contender for Apple Watch contracts.
Their stock prices may be talking instead. Since Apple Chief Executive Tim Cook demonstrated the watch on March 9, shares of Hon Hai, LG Display and TPK have ticked upward.
Suppliers in East Asia have won contracts over the past half decade to make the iPhone and iPad, buoying company shares and helping to sustain local economies. Taiwan and South Korea depend on exports, with technology a top category for both. Assemblers such as Hon Hai give suborders to factories in China, in turn creating jobs there.
"I think not only for Apple Watch, but major components of consumer electronics have been controlled by Asia for a long time," said Eric Chiou, senior research director with market research firm WitsView in Taipei. He also predicts it will be Quanta that assembles the watches and LG that makes the displays. "The Asia supply chain is meaningful for all consumer electronic products."
Sourcing its parts and manufacturing from Asia also saves Apple money on labor; wages are lower in much of Asia than in Western countries.
Despite possible business risks to Apple, its watch could energize the wireless device market broadly at a time when tablet shipments have been slowing worldwide and smartphones have not been offering new landmark innovations. The Apple Watch will allow users to take calls, track their exercise, and even send heartbeats in lieu of messages.
Only Apple has a definitive list of its watch contractors, and it will not release their names. But market researchers covering Asia generally meet privately with people inside the would-be assemblers and suppliers to determine who's on the roster.
The Market Intelligence & Consulting Institute correctly predicted PC maker Acer would develop Google Chromebooks. Strategy Analytics accurately forecast over the past year that smartphone developer HTC would release a Nexus tablet and its high-end One M9 handset.
Inventec staffers in Taipei said this week they were unsure whether their company had reached an agreement with Apple. Publicists for LG Display and TPK declined to comment. An official in Quanta's Taipei public relations office said the firm could not discuss specific orders or clients. Hon Hai and TSMC officials cited client confidentiality when asked about working on the watch.