Apple supplier Pegatron Q2 results disappoint

Pegatron, a supplier of components for tech giant Apple, has failed to reach analyst estimates in the second quarter.

The manufacturer posted net income of NT$1.39 billion ($46 million) in the three months ending June 30. Analyst estimates compiled by Bloomberg predicted Pegatron would reach an average of NT$1.72 billion.

Apple accounts for 27 percent of Pegatron's sales, followed by Asustek and Lenovo. However, the manufacturer also supplies components for Microsoft, which has recently slashed the price of the Surface tablet. The Redmond giant has admitted sales of the Surface RT have been dismal, which resulted in a "write-down" of $900 million. 

Pegatron is in competition with larger rival Foxconn -- also known as Hon Hai -- for manufacturing contracts. While Pegatron supplies components for some iPhone models and the iPad Mini, Foxconn assembles larger models. Some analysts believe that while Pegatron is a smaller company, as it accepts contracts with less of a profit margin, the manufacturer has the potential to secure more work from the iPad and iPhone maker in the long run.

Both Foxconn and Pegatron have been the target of accusations by worker advocate group China Labor Watch, which has alleged a series of factories hire underage workers, withheld worker pay and provided poor living conditions. Apple, which has established a supplier code of conduct designed to protect workers, said that Pegatron employees work an average of 46 hours per week, and these allegations are under review. Foxconn CEO Jason Cheng promised that the claims will be investigated in full.