'iPhone 5' expected in this year

Apple's next generation iPhone will have a faster processor and will begin shipping in September, according to three people with direct knowledge of the company's supply chain.

The production of the new iPhone will start in July or August and the smartphone will look largely similar to the iPhone 4, one of the sources told Reuters.

The iPhone - introduced in 2007 with the touchscreen, on-demand application template now adopted by its rivals - remains the gold standard in the booming smartphone market.

Reports on the timeline of the new iPhone launch vary, though it is largely expected that Apple will likely refresh its iPhone4 later this year. It was introduced in June 2010 by chief executive Steve Jobs and shipped in the same month.

The timing would mean a delay from the usual 12-month refresh cycle for the iPhone since its introduction in 2007, when new versions have been shown off at Apple's Worldwide Developers Conference in San Francisco. That is presently scheduled for 6-10 June.

The sources declined to be identified because the plans for the new iPhone were not yet public. An Apple spokeswoman in Hong Kong was not available for comment.

he sources declined to be identified because the plans for the new iPhone were not yet public. An Apple spokeswoman in Hong Kong was not available for comment.

The iPhone is one of Apple's most successful products, with more than 16 million sold in the last quarter of 2010. It accounted for more than a third of the company's sales in the quarter.

Apple sources many of its components from Taiwan-based suppliers, many are expected to benefit from a rise in sales as some of them rely on the US company for about 20-40% of their business, said Vincent Chen, an analyst at Yuanta Securities.

"For some suppliers, Apple is their cash cow, or their bread and butter," Chen said. "With all these versions being launched so frequently, it will be the so-called low-margin suppliers, such as those that assemble the phones, who will benefit the most."

Suppliers to the new iPhone include camera module maker Largan Precision, touchscreen panel maker Wintek Corp and case maker Foxconn Technology, two of the people said.

The companies would begin production either in July or August before shipping components to Hon Hai Precision Industry, flagship of Foxconn, for assembly, they said. Officials at Largan, Wintek and Foxconn declined to comment.

On Wednesday, Largan's Taipei-listed shares ended up 3.7%, Hon Hai rose 4.3% and Foxconn rose 6.6%, outpacing the benchmark Taiex share index's 2% advance.

Apple, a big purchaser of touchscreen displays and flash memory, is also dependent on Japan for some of its key components, sparking concern that the disruption due to the crisis there may hurt its gross margins.

But other reports have suggested it moved quickly after the earthquakein March to secure supplies from other sources.

Apple is expected to report another spectacular quarter on Wednesday evening, tempered by growing caution over how supply constraints will squeeze margins and restrain iPhone and iPad sales. Early estimates suggest it will have sold 18m iPhones and between 4m and 7m iPads in the quarter.