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Pegatron to build Apple's low-cost iPhone as company looks to diversify supply chain— report

Ashleigh Allsopp | May 31, 2013
Foxconn's iPhone 5 production problems may have led Apple to consider moving away from the manufacturer, says the Wall Street Journal

Apple is said to be looking to rely less heavily on its main manufacturing partner, Foxconn, following production problems that took place during the roll out of the iPhone 5. Instead, the company is reportedly turning to Pegatron to assemble some of its next-generation of devices, in a bid for "risk diversification".

The Wall Street Journal reports that Pegatron will be the primary assembler of Apple's rumoured low-cost iPhone, which is expected to hit the shelves later this year. Pegatron is already building some of Apple's iPhones, as well as the iPad mini. Prior to this, Foxconn was Apple's main manufacturing partner.

According to WSJ's sources, Apple's decision to move some of its assembly line to Pegatron follows the problems that Foxconn experienced when manufacturing the iPhone 5 last year.

In April, it was reported that Apple sent back a whopping eight million iPhones to Foxconn when they didn't meet the company's high standards due to scratches and scuffs in the casing of the devices. The returns are thought to have cost the manufacturer around $1.6 billion.


WSJ's report also highlights the bad press received by Foxconn after a string of suicides at its factories in China, and an investigation into the treatment of staff by the Fair Labor Association.

Pegatron employs around 100,000 staff in Taiwan and China, but is set to expand its Chinese workforce by 40 per cent in the second half of 2013.

This is not the first rumour we've heard about the possibility that Pegatron may be manufacturing the cheaper iPhone. Earlier in May, Business Insider said that Pegatron is offering Apple more competitive pricing.


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