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

iphone_5_black_whiteApple 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.
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.
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.

Top Rated Comments

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15 months ago
Sigh, I want an iPhone made by Megatron.
Rating: 14 Votes
15 months ago

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.


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.
Rating: 10 Votes
15 months ago

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. :(


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.
Rating: 7 Votes
15 months ago
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.
Rating: 6 Votes
15 months ago

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. :(


Does it come with knighthood title ? :confused:
Rating: 6 Votes
15 months ago

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. :(


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.
Rating: 5 Votes
15 months ago

Is this a misprint or is an iBook not what I thought it was?


It depends what you think it is.

This is the iBook they are talking about.

Rating: 4 Votes
15 months ago

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.


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.
Rating: 4 Votes
15 months ago

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. :(


If it's a status symbol, you wouldn't be able to find it in Walmart, CostCo or BestBuy at a discount.
If it's a status symbol, you wouldn't be able to get it at $99 with contract.

Literally anyone could afford one, turn left or right, some random people has it too, what's so symbolic about it?
Even third ranked, underdog carrier as T-Mobile can have one now. It's a commodity.

iPhone is a status symbol? Only in Raftysworld :D
Rating: 4 Votes
15 months ago

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.


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!
Rating: 3 Votes

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