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Pegatron to Assemble Low Cost iPhone as Apple Works to Balance Supply Chain

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Apple is continuing to seek improved supply-chain risk management by shifting more of its manufacturing needs from its longtime partner Foxconn to Pegatron, notes The Wall Street Journal in a new report that suggests Pegatron will be responsible for the assembly of Apple's low cost iPhone.
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, the world's largest electronics contract manufacturer--has held over the production of Apple's mobile products.
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According to the report, the change is meant to help Apple expand its product lines and prevent supply chain disasters that could hold up the production of Apple's devices. At launch, the iPhone 5 was criticized for its tendency to scratch and scuff, which eventually led to increased quality control standards to reduce out-of-the-box issues.

Foxconn executives admitted last year that the iPhone 5 was difficult to assemble, and an April rumor suggested that Apple returned 5-8 million defective iPhone 5s to the company after continued issues with quality control.
Foxconn, in its growing heft as the world's largest electronics contract company, was also getting more difficult for Apple to control, with incidents such as changing component sourcing without notifying Apple, people familiar with the matter said. At the same time, Foxconn became frustrated with the growing complexity of Apple products, such as the iPhone 5, which is difficult to make in the volumes Apple needed.
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In addition to cutting down on the risk of production issues, Pegatron is also said to have accepted less profit in order to secure orders from Apple. Tim Cook, too, is said to be responsible for the change, as he is more interested in diversification than maintaining a strong relationship with Foxconn chairman Terry Gou.

Despite being a smaller manufacturing partner, Pegatron has a long history with Apple. The company was responsible for packaging Apple's first generation iBooks, and as noted above, began assembling a small number iPhones for Apple in 2011. Currently, Pegatron produces the lion's share of Apple's iPad minis.

Apple's low cost iPhone could bring in huge profits for the smaller supply partner, as it is said to be aimed at untapped emerging markets. Earlier this month, Pegatron announced that it would boost its workforce by 40%, fueling initial rumors that the company would produce the cheaper iPhone.

The low cost iPhone is expected to come with an unsubsidized price tag between $350-$400. Release dates for the device have been murky, with sources targeting both a late 2013 release and a 2014 release.

Article Link: Pegatron to Assemble Low Cost iPhone as Apple Works to Balance Supply Chain
 
Article Link
https://www.macrumors.com/2013/05/29/pegatron-to-assemble-low-cost-iphone-as-apple-works-to-balance-supply-chain/
tevion5

tevion5

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Jul 12, 2011
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I am still highly skeptical Apple are actually going ahead with the whole budget phone. I think the older models meet that market gap. Perhaps for poorer countries but I've yet to see Apple enter that sort of market. I mean, they're Apple.
 
verniesgarden

verniesgarden

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tevion5 said:
I am still highly skeptical Apple are actually going ahead with the whole budget phone. I think the older models meet that market gap. Perhaps for poorer countries but I've yet to see Apple enter that sort of market. I mean, they're Apple.
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Didn't Tim Cook pretty much nixed the idea of a parallel iPhone line?
 
N

nishishei

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Jun 5, 2005
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I would gladly pay $100 more for a made in USA iPhone. Too bad Pegatron is just another even cheaper Chinese manufacturer.
 
R

Raftysworld

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Oct 28, 2011
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Why would Apple want to open up the iPhone to people who can't afford it? Part of the appeal of the iPhone is because its a status symbol. I feel like this is a big mistake. :(
 
N

nishishei

macrumors regular
Jun 5, 2005
203
0
Raftysworld said:
Why would Apple want to open up the iPhone to people who can't afford it? Part of the appeal of the iPhone is because its a status symbol. I feel like this is a big mistake. :(
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If you want status, become a surgeon.

An iPhone is not a status symbol in the US. Half of the EBT card users have one.
 
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X

xVeinx

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Oct 9, 2006
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How much of this is Apple diversifying their manufacturing? I mean that in the sense that they are expanding, but not decreasing or shorting production at Foxconn? It seems like journalists are constructing a meta-narrative, or at least implicitly suggesting, that Apple is screwing over everyone in its quest for manufacturing volume and expertise. This type of thing is common for businesses all the time, where they change suppliers depending on their needs, whether or not the supplier can actually provide the needed products, etc. Having a solid relationship with a supplier can be beneficial for both, but its a business at the end of the day, and sometimes you end up competing with one another. Markets change, technology changes, and company goals change. Basically, this whole thing is non-unique, though surprising to people unfamiliar with these things...
 
Sedrick

Sedrick

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Nov 10, 2010
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nishishei said:
If you want status, become a surgeon. An iPhone is not a status symbol in the US. Half of the ECB card users have one.
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Between a myriad of Android devices and an iPhone, yes it is still a status symbol. Not want it once was, for sure, but you notice an iPhone and can't tell what kind of Android you're looking at.
 
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nishishei

macrumors regular
Jun 5, 2005
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Sedrick said:
Between a myriad of Android devices and an iPhone, yes it is still a status symbol. Not want it once was, for sure, but you notice an iPhone and can't tell what kind of Android you're looking at.
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Get a life.

It's a $199 or $99 phone with a contract. No one over 20 years old gives a flying **** what phone you carry. If you think it's a status symbol, then it confirms you're pretty low status and that one costs at least your daily salary.
 
N

newagemac

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Mar 31, 2010
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So this is why Foxconn is supposedly "diversifying" due to "lower Apple growth". Lower Apple growth for Foxconn to be exact. For Pegatron, not so much.
 
4

4TheLoveOfTech

macrumors 6502
Feb 27, 2013
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Sedrick said:
Between a myriad of Android devices and an iPhone, yes it is still a status symbol. Not want it once was, for sure, but you notice an iPhone and can't tell what kind of Android you're looking at.
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No, it is not even remotely a "status" symbol. Walmart, Radio Shack, and every other bargain store has them. The 4 can be picked up for no money with a 2 year contract.

A mobile phone is not a symbol of status (at least in the US) and if it is to you maybe take a look at your priorities.

You notice what kind of case it's in or that it's an iPhone because I can't tell one case from another.
 
A

AppleVsAndroid

macrumors member
Nov 12, 2012
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tevion5 said:
I am still highly skeptical Apple are actually going ahead with the whole budget phone. I think the older models meet that market gap. Perhaps for poorer countries but I've yet to see Apple enter that sort of market. I mean, they're Apple.
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You are talking as if BMW should sell 2010 car model for cheaper price in 2013. Old iphones are of no good when you look at future and how technology is changing at a faster pace. People would rather buy Samdung S4 in emerging economies like they are doing right now.

Idiots always argue that older model iphones are cheap. World (growing middle class) does not like to spend money to buy older models which are smaller screen outdated slower version!

Poorer countries? Don't kid yourself. People in China and India have homes worth more money than you and your parents have all together in assets. There is a Concept called Saving in minds of those people which keeps them a bit away from buying expensive iphone! BTW Apple wants those growing middle class people not poor people who have no use of internet!
 
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charlituna

charlituna

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Jun 11, 2008
9,636
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Los Angeles, CA
tevion5 said:
I am still highly skeptical Apple are actually going ahead with the whole budget phone. I think the older models meet that market gap. Perhaps for poorer countries but I've yet to see Apple enter that sort of market. I mean, they're Apple.
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I'm skeptical also after seeing all these trade in etc programs. And the continued issues with resellers swarming launches in China

Now a lower feature iPhone aimed at those who have an iPad for their needs and thus just really need a phone I could see. And as one of those people would welcome.

Also I'm skeptical about that alleged component switching talk. Apple is ultimately responsible for the quality and licensing of the components and they are OCD about these devices (as noted they sent back several million for quality issues) so they would almost certainly buy the components themselves not leave it up to Foxconn to do it
 
JetBlack7

JetBlack7

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May 14, 2011
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IMO Apple looks as if its turning into a more "mainstream" and affordable brand if they do go ahead with this. They only release a phone each year which is very good and its not for every wallet.

If this goes ahead, Apple might be losing its prestige and giving people more access to their products. Not saying its bad, but they position in the business might change.
 
AppleMark

AppleMark

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Jun 17, 2009
852
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Raftysworld said:
Why would Apple want to open up the iPhone to people who can't afford it? Part of the appeal of the iPhone is because its a status symbol. I feel like this is a big mistake. :(
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Oh dear.... Status symbol? No poor people allowed?

A small part of me hopes that Apple does fall from grace in the eyes of the masses, if only to get rid of these people with their bling bling attitude to worshiping everything that shines.
 
usersince86

usersince86

macrumors 6502
Oct 24, 2002
431
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Not A&F

Raftysworld said:
Why would Apple want to open up the iPhone to people who can't afford it? Part of the appeal of the iPhone is because its a status symbol. I feel like this is a big mistake. :(
Click to expand...

Let's hope you're wrong -- I don't like the idea that only the rich can use Apple products. Sounds a bit like A & F's elitism (different, but related)...

Been using Apple products since 1986, so I get the "elite" concept. But still think that accessibility is a good thing.
 
R

Raftysworld

macrumors 6502
Oct 28, 2011
287
0
AppleMark said:
Oh dear.... Status symbol? No poor people allowed?

A small part of me hopes that Apple does fall from grace in the eyes of the masses, if only to get rid of these people with their bling bling attitude to worshiping everything that shines.
Click to expand...

Are you trying to imply you have never owned ANYTHING in an attempt to make a good impression? You know, you've never bought slightly nicer clothes to look good, or a slighty better than trashy car to make a good impression? :rolleyes:
 
AppleMark

AppleMark

macrumors 6502a
Jun 17, 2009
852
200
The CCTV Capital of the World
Raftysworld said:
Are you trying to imply you have never owned ANYTHING in an attempt to make a good impression? You know, you've never bought slightly nicer clothes to look good, or a slighty better than trashy car to make a good impression? :rolleyes:
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I did not buy any of my iPhone's to impress anybody, no. :confused:

It say's it all that you think it does. LOL!

Have a nice day.
 
Q

qpdbqp

macrumors newbie
Oct 10, 2012
26
1
After hearing about Foxconn branded accessories and a Foxconn-Mozilla device, Pegatron is just a temp solution.

Apple has a history of doing things themselves when the third-parties are unwilling or unreliable.

So my prediction is the US manufacturing slated for this year will be a trial run for a production facility owned by Apple.
 
R

Raftysworld

macrumors 6502
Oct 28, 2011
287
0
AppleMark said:
I did not buy any of my iPhone's to impress anybody, no. :confused:

It say's it all that you think it does. LOL!

Have a nice day.
Click to expand...

To condense your argument down into a sentence: "I didn't buy the iPhone as a status symbol, therefore no one else did"
 
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