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Foxconn to lose iPad3 and iPhone 5 contracts

Rumours emanating from Taiwan suggest that Apple is about to sack its long-time manufacturing partner Foxconn in favour of Taiwanese rival Pegatron.

A report in the Taiwan Economic News quotes industry sources who say that Pegatron, which has already allegedly signed up to produce the iPhone 5, will also handle the next generation of the Cupertino company's tablet device, the iPad 3.

It had been previously thought that Apple was looking for a secondary supplier to bolster Foxconn's production of the forthcoming gadget, but the latest rumblings posit that Apple will drop Foxconn, which has enjoyed Apple exclusivity for many years, in favour of Pegatron.

Foxconn has been plagued with negative publicity surrounding a spate of suicides at its massive Chinese facilities - a PR nightmare for Apple which was further compounded recently when an explosion at one of its plants resulted in the death of several employees.

The report suggests Apple's component supply chain will be unaffected by the major reshuffle, but the loss of a conract to build 20 million iPhones and 10 million iPads per quarter will make a massive dent in Foxconn's bottom line.

As always, reports based on secret sources should be taken with a pinch of salt until either Apple or Foxconn's parent company Hon Hai Precision makes an official statement on the matter.