ie8 fix
Click Here

Between the Lines

Larry Dignan, Andrew Nusca and Rachel King
Home / News & Blogs / Between the Lines

Apple pits Hon Hai against Pegatron in supply chain squeeze

By | July 28, 2011, 2:12pm PDT

Summary: Apple’s supply chain prowess is its best advantage and it reportedly is playing its contract equipment manufacturers against each other over iPad 3 and iPhone 5 production.

Apple’s supply chain prowess is its best advantage and it reportedly is playing its contract equipment manufacturers against each other over iPad 3 and iPhone 5 production.

According to the Taiwan Economic Times, Pegatron is poised to grab Apple’s iPad 3 production. Apple has relied on Hon Hai’s Foxconn unit to make the iPad. Apple used Pegatron for its CDMA iPhone 4.

For Apple, the move makes good business sense. The company is far too dependent on Foxconn for its manufacturing. It’s best to diversify manufacturing and assembly if only to leverage a bidding war between partners.

Apple will reportedly keep its other suppliers intact. The Taiwan Economic Times reports:

Most of existing suppliers of iPad`s parts, including TPK Holdings Ltd. (touch panels), Simplo Technology Co., Ltd. and Dynapack International Technology Corp. (battery pack modules), Largan Precision Co. (camera lens modules) and Foxconn Technology Co., Ltd. (PC housings), will remain on the supplier list.

Note that the Taiwan Economic News cited industry sources for its report. The report could also have been floated to get better pricing from Foxconn.

Related:

Kick off your day with ZDNet's daily e-mail newsletter. It's the freshest tech news and opinion, served hot. Get it.

More from “Between the Lines”

Topics

Supply Chain, Apple iPad, Supplier, Apple Inc., Channel Management, Supply Chain Management (SCM), Manufacturing, Marketing, Enterprise Software, Software, Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

Disclosure

Larry Dignan

Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.

Biography

Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.

For daily updates, follow Larry on Twitter.

19
Comments
Add Your Opinion

Join the conversation!

Just In

functional
lala14 7th Apr
Solar PV Installers
whatever it is the apple give jobs and has contribution a lot in the economy. We can't deny that it was part of their strategy to gain more income.
View in thread
0 Votes
+ -
RE: Apple pits Hon Hai against Pegatron in supply chain squeeze
Zippereye125 29th Jul
Why would anyone do business with Apple - by the time you've blown a billion or ten ramping up production enough to handle demand they dump your a$$ for your competition. Over and over and over...
0 Votes
+ -
RE: Apple pits Hon Hai against Pegatron in supply chain squeeze
His_Shadow 29th Jul
@Zippereye125 Spare us your mewling. This is business. If you are laboring under the delusion that any device manufacturer on the planet operates in a fundamentally different fashion from Apple in this regard, you are just another pathetic wanker who can't miss a chance to paint Apple as Evil.
0 Votes
+ -
RE: Apple pits Hon Hai against Pegatron in supply chain squeeze
AdnanPirota 30th Jul
@His_Shadow
What do you mean Apple is not Evil ? It has got more cache than the whole USA !
0 Votes
+ -
RE: Apple pits Hon Hai against Pegatron in supply chain squeeze
non-biased 3rd Aug
@AdnanPirota The fact that complete morons have been running the USA government for years does not in any way make Apple evil.
0 Votes
+ -
This is why you have these things called contracts.
fr_gough 29th Jul
So that you can say: I will invest 1 billion in ramping up production in return for a guarantee of 5 billion in orders.
0 Votes
+ -
RE: Apple pits Hon Hai against Pegatron in supply chain squeeze
non-biased 3rd Aug
@Zippereye125 So apparently you don't know anything about business do you?
0 Votes
+ -
RE: Apple pits Hon Hai against Pegatron in supply chain squeeze
nhtuyenbk 17th Feb
@Zippereye125
This is a longshot, but maybe We can find our pet afterall. Thanks we almost fell off our chairs when wwe saw this cat with a white four star on the middle of his orange back which is rare. http://www.baoveviettien.vn
http://kynangspk.info/diendan
http://design24h.biz
0 Votes
+ -
Bull
m0o0o0o0o 29th Jul
I'm an Apple fanboi, but I'm also a contract manufacturer. NOTHING pisses me off more than when I work my arse off my customer, beat the tar out of the price, work my people on Sundays and holidays, and bail them out of jam after jam (without charging them a premium for it), only to have them second-source for one lame reason or another. "Way too dependent" is just one such reason. After you make me "way too dependent" on your business you screw me? That's not "good business". That's treating someone who you want to be your "partner" like they don't matter. It's why we won't do business with US automakers, but we'll do whatever any transplant wants. Loyalty cuts both ways.
0 Votes
+ -
RE: Apple pits Hon Hai against Pegatron in supply chain squeeze
His_Shadow Updated - 29th Jul
@m0o0o0o0o Wahahahahahahaaaaa...

Apple is on track to make over 100 million various devices this year alone. None of your personal anecdotes apply to a company that has a massive global reach.
0 Votes
+ -
Then I suggest you hire a lawyer to help you write better
fr_gough 29th Jul
contracts.
0 Votes
+ -
RE: Apple pits Hon Hai against Pegatron in supply chain squeeze
richardw66 29th Jul
@m0o0o0o0o

I suggest you prove you are a contractor to Apple - not just another spin merchant.
0 Votes
+ -
RE: Apple pits Hon Hai against Pegatron in supply chain squeeze
non-biased 3rd Aug
@m0o0o0o0o Your right, loyalty does cut both ways. I use contract manufactures all the time all over the country and loyalty isn't normally part of their business model. There are a couple that seem to care about their customers and I will give those so leeway in regard to pricing and turn around because I know they will take care of me in the long run. The majority though will jack their customers around whenever it benefits them.
0 Votes
+ -
RE: Apple pits Hon Hai against Pegatron in supply chain squeeze
jrlambert 29th Jul
First Foxconn (Hon Hai) isn't a Contract Equipment Manufacturer (CEM).. It is a Contract Manufacturer (CM)
With intentions of becoming a ODM (original design manufacture).

I too provide CM work for numerous companies (including Foxconn - as a twist of fate would have it).
I too would like to see a bit more appreciation (loyalty) for the additional support provided.
But, in this world, it isn't going to happen.

It has come down to:
Yea, you did all these great things for me last week, but what have you done for me today?

Apple , Foxconn I don't care what happens to them.
Apple represents a very small percentage of Foxconn's business ( Foxconn has ~1.3 million employees)
Apple's 100 million devices? not that big of deal.
What? 100 devices / year per employee?

But I doubt either of them are agreeing to contracts they can't live with.
Not the case for smaller CMs in dealing with larger companies.. they are often forced in to very bad situations - just because they can't afford the legal costs to be treated right (agreed to ). Big companies can get better lawyers, resolutions take years in the courts, etc..)

If you think the system is anywhere near fair.. keep dreaming.

Apple splitting up the production? Even if the price is higher with alternate source, it makes a good strategy.
Neither should be more than 20-30% dependent on the other.
0 Votes
+ -
cong ty bao ve
nhtuyenbk Updated - 17th Feb
This is a longshot, but maybe We can find our pet afterall. Thanks we almost fell off our chairs when wwe saw this cat with a white four star on the middle of his orange back which is rare.


http://baoveviettien.vn
http://kynangspk.info/diendan
http://design24h.biz
http://planet.edu.vn
0 Votes
+ -
Acne Treatment Review
mikehenry1 2nd Mar
Very efficiently written information. It will be priceless to anybody who uses it, together with myself. Sustain the good work ??? for positive i will try extra posts.
Acne Treatment Review
0 Votes
+ -
Physical Therapist Jobs
mikehenry1 6th Mar
Merging with the Fusion Centers and Fire Service would be a great decision as this would open outlet of knowing more the community whom the Fire Department are rendering their services
Physical Therapist Jobs
0 Votes
+ -
Thirty One Totes
mikehenry1 9th Mar
iphone sending information i'll get it so ice workkkkkkkkkkkkkkkkkkkkkkkkkkkkk keeeeeeeeeeepppppppppppppppppppppp it on. great workkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkk.
- Thirty One Totes
0 Votes
+ -
what define business
lala14 7th Apr
Sunpower
business is business, i guess there is a good thing on this well definitely it has also a disadvantage to it.
0 Votes
+ -
functional
lala14 7th Apr
Solar PV Installers
whatever it is the apple give jobs and has contribution a lot in the economy. We can't deny that it was part of their strategy to gain more income.

Join the conversation!

Formatting +
BB Codes - Note: HTML is not supported in forums
  • [b] Bold [/b]
  • [i] Italic [/i]
  • [u] Underline [/u]
  • [s] Strikethrough [/s]
  • [q] "Quote" [/q]
  • [ol][*] 1. Ordered List [/ol]
  • [ul][*] · Unordered List [/ul]
  • [pre] Preformat [/pre]
  • [quote] "Blockquote" [/quote]
ie8 fix

The best of ZDNet, delivered

ZDNet Newsletters

Get the best of ZDNet delivered straight to your inbox

Facebook Activity

Blog Roll

Blog Archive

White Papers, Webcasts, & Resources
ie8 fix