360° Coverage : Apple to Diversify Its Portfolio, Expand Beyond Foxconn

Apple to Diversify Its Portfolio, Expand Beyond Foxconn

Apple to expand beyond Foxconn production of iPhones, iPads

Jul 13 2013, 3:17am CDT | by

Apple to Diversify Its Portfolio, Expand Beyond Foxconn
Photo Credit: Today's iPhone


Foxconn, known officially as Hon Hai Productions, has been Apple’s manufacturer of iPhones and iPads for some length of time now. Yet and still, Apple has decided to go beyond Foxconn in hiring other companies to manufacture its iPhones and iPads. 


While Foxconn has been a loyal company to Apple in its time, Foxconn has been planting a way to transform itself from being an only-for-Apple manufacturer, and has even initiated a plan in the works to create its own smartwatch as a way to legitimate the company in its own right. Foxconn has also decided to manufacture Apple accessories as a way to make extra money and keep itself afloat. 


Apple’s decision will hurt not only Foxconn (the manufacturer of iPhones and iPads), but also Pegatron – who has been rumored to produce the new budget iPhone that has been dubbed by some as the “iPhone Lite.” 


While the name does have a nice touch to it, rumors from as far back as January of this year stated that the codename for the budget iPhone was “iPhone Math”; others suggested that the “+” sign in front of the iPhone most likely stands for “iPhone Plus” instead of iPhone Math. 


Why would Apple make such a decision to hurt the finances of two companies that it relies on for products, particularly its long-standing partner Foxconn? Apple is not doing this to injure Foxconn’s economy (although it will, resulting in Foxconn’s own smartwatch to make up for the funds it will lose), but Apple is doing this because Foxconn has been unable to successfully manufacture the iPhone 5 in recent months. 


Just earlier this Spring, Apple returned somewhere between 5 and 8 million iPhones to Foxconn, according to China Business News, because of “a substandard appearance or malfunction.” The iPhones totaled some $1.6 billion, meaning that Foxconn would lose this money to other manufacturers. 


Even as far back as September, the earliest iPhone 5 buyers were claiming that they had problems with their iPhones, such as scratched displays or scratches on the aluminum metal back plate, as well as cracked screens right out of the box. 


In addition to manufacturing defects, a Foxconn official told the Wall Street Journal in October that “The iPhone 5 is the most difficult device that Foxconn has ever assembled. To make it light and thin, the design is very complicated. It takes time to learn how to make this new device. Practice makes perfect. Our productivity has been improving day by day.”


The iPhone 5 is incredibly thin and light when compared to its older iPhone 4S brother, but the iPhone 5S will be thinner than even the iPhone 5 – meaning that, if Foxconn has struggled to make the iPhone 5 and has produced millions of defective iPhones, what will it do with the iPhone 5S? 


For Apple, this is a question worth asking because Apple is also facing problems at this stage with its own economy and investors. The last thing Apple wants to do in the face of questionable investor confidence is have a situation where millions of iPhones must be returned to the company that made them. 


When you add this to the questionable worker treatment in Apple factories (particularly Foxconn), you can see why Apple would want to distance itself and go with a company that will comply more with ethical rules. 


Foxconn has been referred to as “the most sophisticated mass-producer of gadgets in the world”; if this moniker is true, however, who will adequately replace Foxconn in Apple’s iPhone and iPad production? 


At the moment, Apple has its sights set on three companies: Taiwanese company Compal Communications, Wistron, and iPod manufacturer Inventec Appliances. 


Is this a smart move by Apple? Will any of these three companies be able to produce the iPhone in the exact way Apple demands, or do you think these companies will fail in the same way Foxconn has? Let us know what you think in the comments. 



<a href="/latest_stories/all/all/22" rel="author">Deidre Richardson</a>
Deidre Richardson is a long-time Apple fan and reports passionate about the latest Apple news and rumors.


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