Apple is looking to diversify its presence in the Asian supply chain, according to a new report from The Wall Street Journal. Instead of partnering with Foxconn to make the rumored budget iPhone, Apple has reportedly commissioned Pegatron, a rival factory, to build the device.
Foxconn has been making the majority of Apple’s products for years, but under the leadership of Tim Cook, the umbilical cord is being cut.
From the Journal’s report:
Pegatron Corp., named after the flying horse Pegasus, will be the primary assembler of a low-cost iPhone expected to be offered later this year. Foxconn’s smaller rival across town became a minor producer of iPhones in 2011 and began making iPad Mini tablet computers last year.
Pegatron’s rise means an end to the monopoly that Foxconn Technology Group—the trade name for Hon Hai Precision Industry Co., the world’s largest electronics contract manufacturer—has held over the production of Apple’s mobile products.
As Apple grew larger over the last several years, so did Foxconn—mainly due to the overwhelming success of the iPhone and iPad. According to today’s report, the Taiwanese manufacturer has started asserting more control over the assembly process than Apple likes, “such as changing component sourcing without notifying,” etc.
There were some initial glitches with manufacturing the iPhone 5 last year that resulted in Foxconn shipping a ton of units with scratched metal frames. Pegatron has reportedly offered Apple cheaper prices for making the budget iPhone.
Pegatron recently announced that it plans to boost its workforce by 40% in the second half of this year, which supports the notion that it will be making a new Apple product during that time.
Source: The Wall Street Journal
Image: Martin Hajek
