Chinese manufacturing firm Pegatron experienced record revenues in the third quarter of 2013 after inking a deal with Apple to be the primary production partner for the iPhone 5C. As the saying goes, however: mo’ money, mo’ problems.
While Apple’s iPhone 5C orders helped to buoy the economic outlook of Pegatron, they also led to slimmer profit margins. In order to get up to speed for the launch of the low-cost plastic iPhone, Pegatron first needed to address a worker shortage. Then came the high production costs associated with Apple devices. Throw in Apple’s desire to diversify its supply chain, which has led to more competitive pricing bids from potential partners, and it’s easy to see why Pegatron is feeling the squeeze.
To compound the issue, Apple is now reducing orders for the iPhone 5C, according to sources. At the same time, Pegatron is receiving more orders for the pricier iPhone 5S.
China’s factories, especially those associated with Apple, are increasingly under the microscope when it comes to labor rights and laws. Wages and costs are expected to rise continually over the coming years. Pegatron is seeing first hand both the benefits and challenges of being associated with the global force that is Apple.
[via WSJ]
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