Apple is shifting iPhone production away from long-time sole supplier Foxconn in favor of relatively newcomer Pegatron — which likely explains the Taiwan-based manufacturer’s big earnings miss just a month ago.
In fact, Apple’s new lower-cost iPhone will be primarily built by Pegatron, according to a Wall Street Journal report today. Foxconn will continue to manufacture the bulk of high-end iPhones.
Foxconn reported an almost 20 percent drop in earnings in the past quarter. At the time that seemed like a sign of lower iPhone unit sales. However, Tim Cook has warned multiple times in recent appearances against reading too much into the shifting value of Apple outsourcing contracts.
And he could be right.
Sixty to 70 percent of Foxconn’s revenue is dependent on assembling Apple iPhones and iPads, and the company was once the only manufacturer of Apple’s mobile products. At the time, opinion was divided between this being a bad sign for Apple sales — which had been good that quarter — or simply an indication of Apple switching up manufacturing partners to some of its 748 other suppliers.
This new news is a strong indicator that Cook was not simply blowing smoke.