New Apple Manufacturer?

Mike is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

As much of Silicon Valley is moving toward free love , "transparency is great" policies (or at least stating they are), Apple (NASDAQ: AAPL) is sticking with the old secrecy thing.  Tim Cook, Apple's CEO, recently stated at a conference that, "We're going to double down on secrecy on products.  I'm serious."  Due the top secret nature of the their products even some suppliers cannot admit to having Apple as a customer.  However, if a company gets a "new contract" and they suddenly make massive factory expansions to start pumping out tablets and smartphones, people start to wonder who this new customer is.  Is it Apple, Google (NASDAQ: GOOG), or some other smartphone/tablet maker?  Both Apple and Google have huge cash stockpiles and can fling large stacks at manufacturers.

On June 5, 2012, Nam Tai Electronics (NYSE: NTE) announced that they secured a new customer and would be rapidly producing tablets and smartphones.  They have been a long time China-based provider of manufacturing and design services for telecommunication and consumer product companies.  Then on August 6, 2012, they put out a press release displaying their massively increased revenue and earnings.  Q2 sales increased 62% and net income increased by over 200%.  Why the gain?  They had been pumping out mass quantities of tablet liquid crystal display modules ("LCMs") for their new customer.  Plus the new customer gave them $4 million just to help them out with Nam Tai's large factory expansions.  Apparently this is just the beginning.  Nam Tai just bought 470,000 sq ft in land for further expansions to their tablet LCM manufacturing facility.  iPad minis?

One of Nam Tai's other facilities is undergoing expansion as well.  This is the smartphone LCM facility which was supposed to complete a pilot project for their new customer in August and then mass produce the LCMs in September.  Does that mean the product will be ready to sell in late October or November?  The iPhone 4s came out last year in October and the next gen is speculated to be coming out around the same time this year.

Nam Tai's expansion and jump in earnings have lead to a 62% increase in the stock price over the last 2 weeks.  Trading volume has been huge.  Up from an average of 50,000 shares traded daily to a few days of 3 million shares traded.

Certainly a company like Research In Motion (NASDAQ: BBRY) could use a fresh new partner to turn things around.  RIM is planning its biggest BlackBerry launch ever with five new phones.  Oh yes, RIM also has the" much loved" BlackBerry Playbook.  Also, Google wants to make a bigger step into the hardware space with its acquisition of Motorola Mobility.  It already has its Nexus phones and tablet.  Or what about HTC or other smartphone makers?  In the end, some big customer is causing Nam Tai to ramp up production.

Of course there is also the possibility of Nam Tai not telling the truth about their numbers.  However, with the share price up over 60% since the Q2 earnings release,  it seems that the market is believing in Nam Tai Electronics.

mthiessen has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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