Apple Looks Towards Pegatron to Help Wane Away from Foxconn
Apple reportedly bolstering ties with partner supplier Pegatron while trying to lessen its reliance on Foxconn, which up to now has been responsible for producing a bulk of the Cupertino California company’s devices. According to people who were familiar with the shift, Apple is looking to grow its supply chain in light of its increasing competition from rival handset makers and to diversify risk after Foxconn fumbled the iPhone 5 rollout by shipping out units with issues according to The Wall Street Journal
Pegatron is also likely to offer more attractive production deals as it tries to garner a bigger slice of Apple’s large consumer electronics business. The publication notes that Foxconn’s previous advantage of scale has “waned” due to steps taken to fix the factory working conditions, a result of increased scrutiny from labor watchdog groups.
Cook is supposedly the catalyst in the move away from Foxconn. Sources mentioned that late Apple cofounder Steve Jobs and Foxconn Chairman Terry Gou had a special relationship as “two leaders with a hero complex.” Cook still has strong ties to Gou and has known the manufacturing mogul before coming to Apple in 1998. In its growing heft as the world’s largest electronics contract company, Foxconn, was getting increasingly difficult for Apple to control, with incidents such as changing component sourcing without notifying Apple. Foxconn at the same time became frustrated with the growing complexity of Apple products such as the iPhone 5, which is difficult to make in the volumes Apple needed.
According to The Wall Street Journal
, Pegatron will be the primary manufacturer of Apple’s rumored low-cost iPhone, though other reports claim that Foxconn will be handling a bulk of the initial orders. KGI Securities analyst, Ming-Chi Kuo previously noted that both Pegatron and Foxconn will split production of the low-cost iPhone while the former will take a bigger share of legacy models such as the iPhone 4 and iPhone 4S.
We’ll have to see how much of this information turns out to be true though by being patient and waiting to hear more concrete evidence.
Source: The Wall Street Journal