Apple Seeking to Shift iPhone Production to Pegatron to Offset Chinese Qualcomm Ban

Discussion in 'iOS Blog Discussion' started by MacRumors, Dec 14, 2018.

  1. MacRumors macrumors bot


    Apr 12, 2001

    Apple is reportedly looking to shift production of older iPhones to Taiwanese supplier Pegatron in an effort to avoid losing billions in revenue as a result of its patent dispute with Qualcomm.


    Earlier this week, Qualcomm was granted an import ban on the iPhone 6s through iPhone X in China after the court found those devices violated two Qualcomm patents.

    However, according to documents seen by Nikkei Asian Review, smartphones produced by Pegatron are exempt from the ban because the Taiwanese supplier paid license fees for the contested software, whereas rival iPhone assemblers Foxconn and Wistron did not.
    Apple has warned that upholding the iPhone ban would cause "truly irreparable harm" to Apple, other companies, and consumers if it is forced to withdraw its devices from the market.

    Late on Thursday, Apple said it will release a software update to iPhone users in China early next week that the company says should address the patent-related issues.

    Article Link: Apple Seeking to Shift iPhone Production to Pegatron to Offset Chinese Qualcomm Ban
  2. chinito77 macrumors member


    Nov 2, 2015
    "Apple has warned that upholding the iPhone ban would cause "truly irreparable harm" to their shareholders" There, fixed it for you!
  3. RightMACatU macrumors 65816


    Jul 12, 2012
    Careful... China might decide to arrest and hold Americans working in China on spying charges :rolleyes:
  4. thisisnotmyname macrumors 68000


    Oct 22, 2014
    known but velocity indeterminate
    Bold move, likely purposely leaked to put added pressure on China to block the second Qualcomm attempt.
  5. brdeveloper macrumors 68020


    Apr 21, 2010
    There is a Foxconn in Brazil. Thanks to the lower taxes, I could get an iPhone SE 128GB for a similar price compared to US. If Foxconn Brazil produced the iPhone 8 it would be nice.
  6. JPack, Dec 14, 2018
    Last edited: Dec 14, 2018

    JPack macrumors 68040


    Mar 27, 2017
    Huh? Do you realize both Foxconn and Pegatron are Taiwanese companies?

    Regardless, both manufacture principally in China.
  7. JPack macrumors 68040


    Mar 27, 2017
    Nope. Pegatron is a second rate assembler for Apple. In the past, they’ve been relegated to manufacturing iPhone 5c and iPad mini. This is a hit for both Apple and their consumers who want quality products.
  8. haruhiko macrumors 601


    Sep 29, 2009
    First the tariffs, then the arrest of Huawei's top executive. Apple is an obvious target for the Chinese to retaliate.
  9. Ricebucket macrumors newbie

    Jul 30, 2004
    This has to be the ultimate misinformed comment.

    All of the manufacturers in question are companies from Taiwan. All of them manufactures primarily in mainland China, not on the island of Taiwan. And there is not a problem for these companies to operate in mainland China.

    Furthermore, this lawsuit is an American company suing another American company. Why is a middle finger to China even necessary? Especially since the mainland Chinese market is the largest mobile phone market in the world.

    Your comment does not make sense whatsoever.
    --- Post Merged, Dec 14, 2018 ---
    Why can't Apple just pay Qualcomm for the lawsuit like Pegatron does? Pegatron will end up passing the costs to Apple anyways for whatever they're paying in royalties.
  10. HacKage macrumors 6502

    May 14, 2010
    Apple releasing an update to work around the patent is as big an admission of guilt as you could imagine. Rather than put their hands up though, they appeal and throw warnings around.
  11. jlc1978 macrumors 68020


    Aug 14, 2009
    Hardly. Even if they believe they will prevail in court they want to limit any damages if they don't. Working around the patent limits the infrigement since the patent in dispute is no longer being used; it alos gives Chian a face saving out to lift the ban without appearing to cave to Apple.

    Sure. If China plays tough Apple can as well. There is no reason to surrender if they think they will utimately win.
  12. Starship67 macrumors 6502a


    Oct 28, 2017
    I’ve had a couple of Pegatron assembled iPhones my current XR is.
    The build quality on Pegtron versus Foxconn is far far better.
  13. thisisnotmyname macrumors 68000


    Oct 22, 2014
    known but velocity indeterminate
    I was referring just to floating the idea, not any potential real move of manufacturing. Meaning that they leaked it themselves as a threat to the Chinese authorities to stop Qualcomm's suit. I don't know anything about the relative strengths of their contract manufacturers.
  14. now i see it macrumors 68030

    Jan 2, 2002
    Maybe Apple isn't the victim and they need to pay what's due. Pay up.
    If any "irreparable harm" comes to apple because of this ruling, it's their own fault.
  15. Peepo macrumors 6502a

    Jun 18, 2009
    If they release update to workaround patents then why shift production to Pegatron then?
  16. 512ke macrumors 6502a


    Sep 10, 2003
    If Apple needs to manufacture outside of China, then you will see other countries rapidly develop their manufacturing capability.
  17. alexgowers macrumors 65816

    Jun 3, 2012
    The problem with this situation is that China has more jobs invested with Apple than qualcomm and upholding a ban would be shooting itself in the foot.

    The Chinese aren't that stupid its purely a threat.
  18. Ruggy macrumors member

    Jan 11, 2017
    It's a pretty complicated affair from what I know of it.
    They were effectively best friends. Qualcomm paid Apple a small fortune to not use products from the competition (and are now facing a $1.2bn fine for breaking anti-competitivity laws) and they were fairly relaxed about doing things which might infringe each other's patents a little. They weren't too bothered about that sort of thing and they both did it in a reciprocal fashion.
    Now, like a couple of neighbours fighting over a fence post, the relationship has deteriorated to the point that they are suing each other over every tiny thing they think they can get leverage on.
    This is a big shot from Qualcom over a very small thing (What is it exactly? A patent for resizing images on a touch screen?) and it's taken the fight to a level Apple, quite sensibly don't want to go to. They will be forced to retaliate. But really they both need to talk sensibly and get back to being realistic before they both suffer really deeply.
  19. Newtons Apple macrumors Core

    Newtons Apple

    Mar 12, 2014
    Jacksonville, Florida
    I wish they would move production of all Apple devices out of China.
  20. Solomani macrumors 68040


    Sep 25, 2012
    Alberto, Canado
    Apple should move production away from China and back to Japan or the USA. More expensive, perhaps, but politically more stable investment in the long term.
  21. Tonal macrumors newbie

    Dec 16, 2018
    There’s another opinion with absolutely zero business economics. Have you considered how much the already-pricey Apple products would cost if production ever moved to either US or Japan? Average Foxconn wage = under $3/hour. Average US wage for an Apple tech is just under $17/hour. Would you pay over $5000 for an iPhone? If not, do you expect Apple to “absorb” the five-fold increase in assembly costs? Or do you think US/Japan workers would accept wages less than 1/3 what they would flipping burgers at McDonalds?

    Having worked at a big box retailer, we always laughed at customers that made bold claims where they want “nothing to do with Chinese made junk” and were prepared to buy Japanese-made laptops. We showed them a certain $2000 made-in-Japan Vaio versus the sub-$1000 Toshiba or HP. They would always “think about it” or pick anything but that Vaio.
  22. pika2000 macrumors 601

    Jun 22, 2007
    Wait, so all of the problem was just because Foxconn didn't pay the license fees?
    And why was Apple targeted? I mean if it's the assembler who didn't pay, it means other products made by that assembler are open for the ban as well no? And Foxconn makes a ton of stuff for everyone. Curious.
  23. npmacuser5 macrumors 65816


    Apr 10, 2015
    That will happen when the real trade problem resolved. Want American made, we all need to pay for it. As long as 90% of the US population purchasing decisions are made on initial cost of All the products they purchase, US manufacturing will Never return. The current solution, force the 90% to pay more by tariffs. The problem with that theory, US manufacturing will take decades to ramp up to what the rest of the world already has in place. Not to mention the costs of doing so. Apple has clearly said the US does not have the means to build their products, both in plants and highly skilled labor. Comes down too, we are addicted to price shopping.

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