'Hon Hai and its handset-making unit, Foxconn International Holdings, will be the most likely choice for Apple's contract,' said Michael Wong, research director at Hantec Investment International.

The new product, which combines telephone, data transfer and multimedia functions manipulated via a touch screen, will be available in the United States from June at US$499 with four gigabytes of storage or US$599 with eight gigabytes.

Foxconn International, which already assembles iPod music players for Apple, also featured among other potential Taiwan-based winners indicated by Goldman Sachs analyst Henry King.

'We believe the potential supplier candidates along the iPhone food chain that could benefit from the iPhone theme story include Hon Hai, Catcher, Largan, TXC, Foxconn Tech of Taiwan whose main business is handset casing, Unimicron, and Nanya PCB,' Mr King said in a report last week. Foxconn Technology makes handsets and iPod casings, among other products.

Investors reacted to the iPhone launch by driving up shares of Foxconn International 4 per cent to HK$24.85 on Thursday last week and a further 1.2 per cent to HK$25.15 on Friday.

'We plan to sell 10 million units of iPhone in 2008 and capture about 1 per cent of the cell-phone market,' said Apple chief executive Steve Jobs at the January 9 launch. A Merrill Lynch report said Apple's expectation of the sales of iPhone next year was realistic.

While Hon Hai and Foxconn International, its Hong Kong-listed unit, are the hottest candidates to be the leading suppliers of the phone, both companies declined to confirm any deal.

'We do not know whether Hon Hai can get an iPhone contract, but if it really happens it will probably ask Foxconn to help in manufacturing and logistics rather than outsource to other companies,' said Foxconn International spokesman Vincent Tong.

Apple has devoted considerable effort over the past 21/2 years to keep its iPhone project secret. Senior management were not allowed to talk about the project with other people, including family members, while the company's closest partners, such as US telecommunications operator Cingular and Web search engines Yahoo and Google could see the real iPhone only shortly before the launch.

Foxconn International, the world's largest handset contract maker, underlined the importance of confidentiality in its dealings with customers, which include Nokia, Motorola and Sony Ericsson.

Merrill Lynch analyst Tong Tseng also included Foxconn Technology on his list of likely winners.

'Besides Hon Hai and Foxconn Technology, Taiwan companies such as Catcher Technology, Cheng Uei Precision Industry, Tripod and [lens maker] Largan may also provide parts for Apple's iPhone,' he said.

Catcher Technology, which makes the case of the low-end iPod Shuffle, should enjoy a net incremental benefit from iPhone without cannibalising its existing iPod business, according to Goldman Sachs.

Mr King saw the introduction of the iPhone as being 'negative to middle-segment and high-end handset makers'.

'But as the launch of iPhone would be in the US only, with Cingular the exclusive carrier at the beginning, we expect that the fundamental impact in the near term on other handset makers would be limited,' the Taiwan-based analyst said.

Possible losers include leading mobile phone makers Nokia and Motorola if consumers are lured away by the iPhone's touch-screen features. Meanwhile, investors have sold down shares of Research In Motion, the Canada-based maker of the business-orientated Blackberry smartphone.

Shares of Hon Hai, whose customers include Hewlett-Packard and IBM, rose 0.4 per cent to close at NT$234 (HK$55.71) on Wednesday last weekand added 1.9 per cent to NT$238.5 last Friday.

Foxconn International's first-half sales soared 84 per cent last year to US$4.38 billion. Net profit doubled to US$300 million.

Apple underlined the importance it now places on consumer products such as the iPhone and the iPod music player by dropping the word 'Computer' from the company name.

Foxconn Technology, like Catcher, will be aiming to be a key supplier of iPhone casings, although as a maker of Nintendo's Wii console, the contribution to revenue from the Apple product may be less in percentage terms than Catcher's gains.

Taiwan-based TXC Corp, a crystal oscillator maker, already supplies Apple with products for the iPod while Unimicron provides printed circuit boards. Tripod is also a PCB maker in Taiwan.

Cheng Uei Precision makes connectors, cable assemblies and power packs used in computers and handsets under the Foxlink brand name.