By Todd Bernhard on Fri, 08/15/2014
Apple News: Where Might Your Next iPhone Be built?
It's no secret (except to this guy) that the next iPhone will be built in China, but for years this has meant Foxconn, the mammoth independent manufacturing firm that has been plagued by reports of poor working conditions. Recently, Apple has decreased their dependence on Foxconn and farmed out more manufacturing work to Pegatron, a competitor to Foxconn. It was expected that Pegatron might pick up 15% to as much as 30% of the next iPhone production.
Now comes word from Digitimes that as many as half of the next iPhones will be built by Pegatron. This gives Apple's Tim Cook some leverage and flexibility. Cook is known for his supply chain management expertise, and he must have been very frustrated by the lack of availability of the gold iPhone 5s at launch, and abundance of iPhone 5c's. While much of that can be explained by the high demand for the gold model and lower demand for the plastic iPhone, that product mix should have been expected, and more importantly, Apple needs to be nimble and respond to changes in demand. A second high volume supplier should give Apple more options.
This also comes on the heels of rumors of delays in producing the "other" next iPhone, the 5.5-inch model. Foxconn was supposed to make 100% of the larger 'phablets' but if it proves difficult for Foxconn to produce in the volumes Apple needs, having another manufacturer could help. And it always helps with negotiations when the other party knows they can be replaced. Before Pegatron, Apple was really at the mercy of Foxconn. Let's hope this also helps with the working conditions, as Apple could exert a little more leverage there, too.