iPhone 6 vendor change-up: Pegatron in, Foxconn out amid Apple divorce


As iPhone 6 manufacturing and all the secrets involved with the new product are shifted to Pegatron, Apple’s continuing divorce from longtime factory partner Foxconn continues. For years Apple employed Foxconn for the bulk of its overseas manufacturing, giving it first priority on new high profile iPhone and iPad models coming down the development pike. But after a period in which everything that could go wrong with that partnership largely ended up indeed going wrong, Apple began shifting its secondary manufacturing to Pegatron for products like the iPad mini. Now the iPhone 6 appears headed straight to Pegatron’s hands. So what went so terribly wrong in the Apple-Foxconn partnership, and what does it mean for devices like the iPhone 6 going forward?

The trail of tears preventing Foxconn from getting even a whiff of iPhone 6 manufacturing goes back at least a year and a half. The first nail in the coffin was the departure of a pair of top Foxconn execs that Apple preferred working with. After that shakeup, manufacturing quality quickly went downhill, with Apple receiving so many initial iPhone 5 units that failed quality control testing that it ended up impacting early availability.

Things only got worse when competitors also began using Foxconn, including Samsung, which Apple considers to be an intellectual property-stealing parasite. That opened the door for Samsung to gain access to Apple’s upcoming product plans before they were announced, and Samsung more than once appeared to be flaunting that fact. Whether Foxconn was covertly selling Apple’s secrets to Samsung, or whether individual factory line workers were being bought off without Foxconn’s knowledge, Apple ended up concluding that continuing to use Foxconn for its upcoming secret products was no longer a safe bet.

Now comes the iPhone 6, which will represent the biggest design and body style shakeup to the iPhone in about four years. More than ever Apple doesn’t want the secrets of the iPhone 6 to fall into the hands of someone like Samsung in advance, giving it a headstart on designing copycat devices. Apple appears to trust Pegatron in this regard, and so it’ll end up with the bulk or maybe even all of the iPhone 6 manufacturing order

As Apple continues to punish Samsung by turning elsewhere for its component orders, and to punish those entities who have been working with Samsung to produce products that copy Apple’s own devices, Foxconn may ultimately be getting hit the hardest. But Apple’s decision to take the iPhone 6 elsewhere goes beyond competitive reasons, and has as much to do with wanting a sufficient amount of quality control-passed initial iPhone 6 inventory available on day one without having to worry about a repeat of the Foxconn iPhone 5 fiasco.

As if to slam the coffin all the way shut, when Foxconn faced financial difficulty last year due to losing half of the iPhone 5 manufacturing to Pegatron, Foxconn not only publicly blamed Apple for the dropoff, but also falsely claimed that it was because iPhone 5 sales were lower than expected. That misinformation was ultimately corrected when Apple announced its quarterly sales numbers which revealed Foxconn had been lying, but the damage to Apple’s stock price had been done in the mean time. Divorce is always messy, and if anything, the iPhone 6 is a fresh start for Apple in its new and increasingly Foxconn-free landscape.

Phil Moore

Phil Moore

Phil covers tech for Stabley Times.