Apple Ditching Foxconn

A blog about business and economics.
May 29 2013 4:59 PM

Apple Moves Away From Exclusive Reliance on Foxconn

WASHINGTON, DC - MAY 21: We will call it "PEGATRON"!

Photo by Chip Somodevilla/Getty Images

For years now Apple's devices have gone hand in hand with the assembly operations of Taiwan-based Foxconn, but today Eva Doo at the Wall Street Journal breaks the news that they're losing their exclusive relationship with Apple.

Another Taiwanese company, Pegatron, has one the contract to be the primary assembler of an as-yet-nonexistent new product Doo characterizes as a "low-cost iPhone". The key issues seem to be two-fold. One is that Foxconn has been raising wages and working conditions of late, and the other is that Pegatron is reportedly willing to lower its usual profit margins in order to get this order. If Apple's going to combine a cheaper iPhone with its own customary very high profit margins, that's the kind of combination it needs.


Apple has been reporting a somewhat mysterious $10 billion a year capital expenditures line item for the past couple of years that's prompted a lot of speculation about equipping some new supplier with appropriate capital equipment. In theory this new Pegatron deal could be one of the outputs of one of those programs. The WSJ says the company will need to expand its Chinese workforce by 40 percent to meet this deal, and presumably that kind of expansion comes with it a lot of needs for extra buildings and other equipment. Perhaps Apple has been spending to make that kind of rapid scaling-up of supplier operations possible.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

Secret Service Director Julia Pierson Resigns

Piper Kerman on Why She Dressed Like a Hitchcock Heroine for Her Prison Sentencing

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

Homeland Is Good Again! For Now.


Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.


How Even an Old Hipster Can Age Gracefully

On their new albums, Leonard Cohen, Robert Plant, and Loudon Wainwright III show three ways.

The U.S. Has a New Problem in Syria: The Moderate Rebels Feel Like We’ve Betrayed Them

We Need to Talk: A Terrible Name for a Good Sports Show by and About Women

Trending News Channel
Oct. 1 2014 1:25 PM Japanese Cheerleader Robots Balance and Roll Around on Balls
  News & Politics
Oct. 1 2014 4:15 PM The Trials of White Boy Rick A Detroit crime legend, the FBI, and the ugliness of the war on drugs.
Oct. 1 2014 2:16 PM Wall Street Tackles Chat Services, Shies Away From Diversity Issues 
The Eye
Oct. 1 2014 1:04 PM An Architectural Crusade Against the Tyranny of Straight Lines
  Double X
The XX Factor
Oct. 1 2014 4:05 PM Today in GOP Outreach to Women: You Broads Like Wedding Dresses, Right?
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
Brow Beat
Oct. 1 2014 3:02 PM The Best Show of the Summer Is Getting a Second Season
Future Tense
Oct. 1 2014 4:46 PM Ebola Is No Measles. That’s a Good Thing. Comparing this virus to scourges of the past gives us hope that we can slow it down.
  Health & Science
Oct. 1 2014 4:03 PM Does the Earth Really Have a “Hum”? Yes, but probably not the one you’re thinking.
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.