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Who Are Apple's iPhone Contract Manufacturers?




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FILE – In this June 28, 2018, file photo, President Donald Trump, center, along with Wisconsin Gov. Scott Walker, left, and Foxconn Chairman Terry Gou Foxconn Technology Group said on Wednesday, Jan. 30, 2019 that it is shifting the focus of its planned $ 10 billion Wisconsin campus away from blue-collar manufacturing to a research hub for the new Foxconn facility in Mount Pleasant, Wis. (AP Photo / Evan Vucci, File)

ASSOCIATED PRESS

This coming Monday, a highly anticipated trial between Qualcomm and Apple will start in San Diego. the showdown is the next, important chapter of a two-year conflict between the two technology powerhouses and now, in this trial, Apple's contract manufacturers. 19659006] Next week's festivities are com plex, as it is the amalgamation of four lawsuits brought together. Here is suing who:

  • Apple is suing Qualcomm for the alleged lack of payment for volume discounts as part of its BCPA (Business Cooperation and Patent Agreement), violating FRAND pricing for its wireless IP, and using its monopolistic position to
  • Apple's contract manufacturers are suing Qualcomm similarly, for charging too much for its IP.
  • Qualcomm is suing Apple's contract contractors for forholding payments for its IP
  • Qualcomm is suing Apple for alleged tortious interference between Qualcomm and the contract manufacturers

Fun, right? There was and will continue to be much more press about this conflict, but today I wanted to shed light on Apple's relatively unknown contract makers (CMs) or Original Device Manufacturers (ODMs) who are at the center of this conflict. ODMs, for the uninitiated, work on behalf of companies like Apple to produce their smartphones. Apple does not manufacture its own devices and does not actually have an IP agreement with Qualcomm; Qualcomm's agreements are with the ODMs. I've had a few decades of experience with ODMs when I was an OEM and chip guy, and ODMs have an interesting bunch. Let's take a closer look at who these ODMs are.

Foxconn, $ 152B revenue

Apple's largest ODM is Taiwan-based Foxconn (officially known as Hon Hai Precision Industry Co., LTD). Foxconn is the world's largest provider of electronics manufacturing, employing 250,000 worldwide (as of 2018), with manufacturing sites in Taipei, Suzhou, Mexico City, Madrid, Cleveland, and more.

Foxconn was founded by CEO Terry Gou back in 1974, with the stated goal of "providing low cost mechanical and electrical parts to drive down the overall cost of electronics worldwide." I had met Terry Gou many times one on one when I worked in product management at Compaq Computer and did business in business with him.

Foxconn Technology Group Chairman Terry Gou speaks during the groundbreaking ceremony for its headquarters in Shanghai, China, Thursday, May 10, 2012. Foxconn Technology Group , the world's largest assembler of consumer electronics, began work Thursday on the headquarters that says it will help spearhead its efforts to sell more on the China market. (AP Photo)

ASSOCIATED PRESS

Today's a powerhouse, a public company with over $ 152 billion of revenue in 2018. Foxconn specializes in manufacturing smartphones, PCs, servers, power supplies, and connectors. In addition to Apple, its top 5 customers include Dell, HP Inc., Samsung, and LG. You have probably used a Foxconn-manufactured product-its repertoire includes iPhones, iPods, iPads, and Apple Watch.

The company has to be applauded for providing so much economic opportunity to 250,000 of its workers, but it's not without controversy. It has suffered from allegations of poor working conditions, with long working hours. In 2010, 14 Foxconn employees committed suicide, a back that was attributed to the company's high-pressure, exploitative work environment The One Device: The Secret History of iPhone by The Guardian here ). Apple has been in the process of investigating the manufacturer, with Tim Cook reportedly meeting with suicide-prevention experts and top Foxconn management in 2011. Ultimately, Apple has decided to maintain the working relationship

. build and manufacturing hub in Wisconsin, incentivized by the largest public subsidy package ever granted to a foreign company by US $ 4.5B worth of incentives. Foxconn initially promised to provide as many as 13,000 well-paid jobs by 2022, an economic impact that was thrown into doubt by reports that Foxconn was considering cutting production and using the Wisconsin facility exclusively for R & D (Bloomberg recently published a scathing report on the deal here if interested in reading more). Recently, according to CNN Foxconn walked back earlier reports and said that it would, in fact, use the Wisconsin facility for manufacturing, though it remains unclear how many jobs would fit under that umbrella versus R & D and knowledge worker roles

Foxconn is the giant in the industry, and I feel it's safe to say, built in part by Apple. I worked at Compaq with Dan Riccio, and Compaq mechanical engineer at the time, now Apple's head of Hardware, who knew I knew Gou and worked with Foxconn

Wistron, $ 29B revenue

Next is Wistron, another Taiwan- based manufacturer of computer and consumer electronics products. Wistron has its own start as the manufacturing branch of Acer, spinning off the PC maker back in 2000. Its lines of business include notebook and desktop PCs, server and storage systems, handheld devices, and various networking and communication products, but it's best known as one of the world's largest manufacturer of notebook computers. Its big-name partnerships include Apple, Microsoft, Dell, Hewlett Packard, and, of course, Acer.

Simon Lin, chairman and chief executive officer of Wistron Corp., arrives at an Intel Corp. news conference in Taipei, Taiwan, on Thursday, Oct. 28, 2010. Wistron Corp. is the world's third-largest contract manufacturer of notebook computers. Photographer: Maurice Tsai / Bloomberg *** Local Caption *** Simon Lin

BLOOMBERG NEWS

Wistron is a publicly traded company that, as of 2018, employs 83,000 people worldwide in manufacturing and support centers across China, Malaysia , Mexico, the Czech Republic, and the United States. In 2018, Wistron raked in revenue of $ 28.9B with gross profits close to $ 1.21B

Wistron was in the news Friday in Apple's Patently about the Indian government suspending Apple's import permit asking the question, "Did Wistron or another Apple supplier try to hide their non-compliance with e-waste rules? "Being a global smartphone / PC ODM is tough

Pegatron, $ 44B

This brings us to Pegatron, also headquartered in Taiwan. Pegatron started its journey as the production arm of ASUSTek Computer (also known as ASUS), spinning off in 2008. ASUS, for that matter, still holds roughly 17% of the company's shares. Pegatron specializes in manufacturing desktop and notebook PCs, wireless systems, motherboards, game consoles, smartphones, and TVs, and boasts both Apple and HP as its largest customers. The iPhone 4 and iPhone 5c were both manufactured by Pegatron.

Employees line up for roll call at a Pegatron Corp. factory in Shanghai, China, on Friday, April 15, 2016. This is the realm in which the world's most profitable smartphones are made, part of Apple's closely guarded supply chain. Photographer: Qilai Shen / Bloomberg

& copy; 2016 Bloomberg Finance LP

As of 2018, Pegatron employs roughly 90,000 people worldwide, in Taiwan, the Czech Republic, China, Mexico, Japan, and the United States. In 2018, it pulled into a revenue of $ 44.43B with profits of $ 1.29B. Like Foxconn, Pegatron has also come under scrutiny in the past for working conditions at its factories near Shanghai, which produce Apple's products [see19659040]. In 1966, Pegatron recently signed on Apple's "commitment [19659005] to run their Apple production on 100 percent clean energy. "

Compal, $ 32B revenue

Lastly let's talk about Compal. The smallest of these 4 ODMs, Compal is also located in Taiwan and employs roughly 64,000 people. It was founded in 1984 and is known primarily for manufacturing notebooks, mobile devices, connected devices, liquid crystal displays and health care products. Compal is purportedly in the midst of trying to expand beyond its primary PC business, dipping its toes into the mobile and industrial computer sectors, according to the Nikkei Asian Review

The exterior of Compal electronics, Inc. with a headquarters in Taipei, Taiwan on Monday, October 23, 2006. Compal Electronics Inc., the world's second-largest maker of notebook computers, reported a 2 percent drop in third-quarter profit on price declines and losses at its flat- screen and telecommunications investments. Photographer: Maurice Tsai / Bloomberg News

BLOOMBERG NEWS

Compal is responsible for the production of many products you may have used at some point-Amazon Alexa, Dell and Lenovo PCs, Apple iPads, HTC, and Sony smartphones. Compal brought in $ 32.09B in revenue in 2018, with profits of $ 987.67M.

Wrapping up

Hopefully, these Apple iPhone ODMs are now available in Taiwan, China, China and the United States. profiles will serve as useful background information on some of the lesser-known players in the larger Apple-Qualcomm feud, which is set to reach a crescendo in coming weeks. The net-net, Apple's top 4 iPhone smartphones ODMs are very large and sophisticated companies, driving $ 260B in revenue, are based in Taiwan, to most of their manufacturing in China, employing half a million people. & nbsp; Keep that in mind as you follow along with the trial the next six weeks. I will be following the trial with interest-stay tuned for further coverage.

Notes: Moor Insights & amp; & nbsp;

Disclosure: Moor Insights & amp; Advanced Apps & nbsp; Apstra, Click Here! ARM Holdings & nbsp; Bitfusion, Cisco Systems Dell EMC Diablo Technologies, Echelon, Ericcson, GlobalFoundries, Google (Nest), HP Inc. Hewlett Packard & nbsp; Enterprise, IBM , Linux Foundation, MACOM (Applied Micro), & nbsp; MapBox, Mavenir, 1966, , Nortek, NVIDIA ONUG, OpenStack Foundation, & nbsp; Peraso, & nbsp; Portworx, & Protect, Pure Storage, Qualcomm Rackspace, Rambus ]Samsung Technologies, Silver Peak, SONY, & nbsp; Springpath, Sprint, Stratus Technologies, & nbsp; TensTorrent, Tobi & nbsp; Technology, & nbsp; Synaptics & nbsp; Vidyo, Wellsmith, & nbsp; Xilinx Zebra, & nbsp; & nbsp;

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FILE – In this June 28, 2018, file photo, President Donald Trump, center, along with Wisconsin Gov. Scott Walker, left, and Foxconn Chairman Terry Gou is participating in a groundbreaking event for the new Foxconn facility in Mt. Pleasant, Wis. Foxconn Technology Group said Wednesday, Jan. 30, 2019 it is shifting the focus of its planned $ 10 billion Wisconsin campus away from blue-collar manufacturing to a research hub, while insisting it remains committed to creating 13,000 jobs as promised. (AP Photo / Evan Vucci, File)

ASSOCIATED PRESS

This coming Monday, a highly anticipated trial between Qualcomm and Apple will start in San Diego. The legal showdown is the next chapter of a two-year conflict between the two technology powerhouses and now, in this trial, Apple's contract manufacturers.

Next week's festivities are complex, as it is the amalgamation of four lawsuits brought together. Here is suing who:

  • Apple is suing Qualcomm for the alleged lack of payment for volume discounts as part of its BCPA (Business Cooperation and Patent Agreement), violating FRAND pricing for its wireless IP, and using its monopolistic position to charge too
  • Apple's contract manufacturers are suing Qualcomm similarly, for charging too much for its IP.
  • Qualcomm is suing Apple's contract producers for forholding payments for its IP
  • Qualcomm is suing Apple for alleged tortious interference between Qualcomm and the contract manufacturers

Fun, right? There was and will continue to be much more press about this conflict, but today I wanted to shed light on Apple's relatively unknown contract makers (CMs) or Original Device Manufacturers (ODMs) who are at the center of this conflict. ODMs, for the uninitiated, work on behalf of companies like Apple to produce their smartphones. Apple does not manufacture its own devices and does not actually have an IP agreement with Qualcomm; Qualcomm's agreements are with the ODMs. I've had a few decades of experience with ODMs when I was an OEM and chip guy, and ODMs have an interesting bunch. Let's take a closer look at who these ODMs are.

Foxconn, $ 152B revenue

Apple's largest ODM is Taiwan-based Foxconn (officially known as Hon Hai Precision Industry Co., LTD). Foxconn is the world's largest provider of electronics manufacturing, employing 250,000 worldwide (as of 2018), with manufacturing sites in Taipei, Suzhou, Mexico City, Madrid, Cleveland, and more.

Foxconn was founded by CEO Terry Gou back in 1974, with the stated goal of "providing low cost mechanical and electrical parts to reduce the overall cost of electronics worldwide." I had met Terry Gou many times one on one when I worked in product management at Compaq Computer and did business in business with him.

Foxconn Technology Group Chairman Terry Gou speaks during the groundbreaking ceremony for its headquarters in Shanghai, China, Thursday, May 10, 2012. Foxconn Technology Group , the world's largest assembler of consumer electronics, began work Thursday on the headquarters that says it will help spearhead its efforts to sell more on the China market. (AP Photo)

ASSOCIATED PRESS

Today's a powerhouse, a public company with over $ 152 billion of revenue in 2018. Foxconn specializes in manufacturing smartphones, PCs, servers, power supplies, and connectors. In addition to Apple, its top 5 customers include Dell, HP Inc., Samsung, and LG. You have probably used a Foxconn-manufactured product-its repertoire includes iPhones, iPods, iPads, and Apple Watch.

The company has to be applauded for providing so much economic opportunity to 250,000 of its workers, but it's not without controversy. It has suffered from allegations of poor working conditions, with long working hours. In 2010, 14 Foxconn employees committed suicide, a back that was attributed to the company's high-pressure, exploitative work environment The One Device: The Secret History of iPhone by The Guardian here ). Apple has been in the process of investigating the manufacturer, with Tim Cook reportedly meeting with suicide-prevention experts and top Foxconn management in 2011. Ultimately, Apple has decided to maintain the working relationship

. build and manufacturing hub in Wisconsin, incentivized by the largest public subsidy package ever granted to a foreign company by US $ 4.5B worth of incentives. Foxconn initially promised to provide as many as 13,000 well-paid jobs by 2022, an economic impact that was thrown into doubt by reports that Foxconn was considering cutting production and using the Wisconsin facility solely for R & D (Bloomberg recently published a scathing report on the deal here if interested in reading more). Recently, according to CNN Foxconn walked back earlier reports and said that it would actually use the Wisconsin facility for manufacturing, though it remains unclear how many jobs would fit under that umbrella versus R & D and knowledge worker

Foxconn is the giant in the industry, and I think it's safe to say that was built, in part, by Apple. I worked at Compaq with Dan Riccio, and Compaq mechanical engineer at the time, now Apple's head of Hardware, who knew I knew Gou and worked with Foxconn

Wistron, $ 29B revenue

Next is Wistron, another Taiwan- based manufacturer of computer and consumer electronics products. Wistron has its own start as the manufacturing branch of Acer, spinning off the PC maker back in 2000. Its lines of business include notebook and desktop PCs, server and storage systems, handheld devices, and various networking and communication products, but it's best known as one of the world's largest manufacturer of notebook computers. Its big-name partnerships include Apple, Microsoft, Dell, Hewlett Packard, and, of course, Acer.

Simon Lin, chairman and chief executive officer of Wistron Corp., arrives at an Intel Corp. news conference in Taipei, Taiwan, on Thursday, Oct. 28, 2010. Wistron Corp. is the world's third-largest contract manufacturer of notebook computers. Photographer: Maurice Tsai / Bloomberg *** Local Caption *** Simon Lin

BLOOMBERG NEWS

Wistron is a publicly traded company that, as of 2018, employs 83,000 people worldwide in manufacturing and support centers across China, Malaysia , Mexico, the Czech Republic, and the United States. In 2018, Wistron raked in revenue of $ 28.9B with gross profits close to $ 1.21B

Wistron was in the news Friday in Apple's Patently about the Indian government suspending Apple's import permit asking the question, "Did Wistron or another Apple supplier try to hide their non-compliance with e-waste rules? "Being a global smartphone / PC ODM is tough

Pegatron, $ 44B

This brings us to Pegatron, also headquartered in Taiwan. Pegatron started its journey as the production arm of ASUSTek Computer (also known as ASUS), spinning off in 2008. ASUS, for that matter, still holds roughly 17% of the company's shares. Pegatron specializes in manufacturing desktop and notebook PCs, wireless systems, motherboards, game consoles, smartphones, and TVs, and boasts both Apple and HP as its largest customers. The iPhone 4 and iPhone 5c were both manufactured by Pegatron.

Employees line up for roll call at Pegatron Corp. factory in Shanghai, China, on Friday, April 15, 2016. This is the realm in which the world's most profitable smartphones are made, part of Apple's closely guarded supply chain. Photographer: Qilai Shen / Bloomberg

© 2016 Bloomberg Finance LP

As of 2018, Pegatron employs roughly 90,000 people worldwide, in Taiwan, the Czech Republic, China, Mexico, Japan and the United States. In 2018, it pulled into a revenue of $ 44.43B with profits of $ 1.29B. Like Foxconn, Pegatron has also come under scrutiny in the past for working conditions at its factories near Shanghai, which produce Apple products (see the BBC's undercover report here ). In 1966, Pegatron recently signed on Apple's "commitment [19659107] to run their Apple production on 100 percent clean energy. "

Compal, $ 32B revenue

Lastly let's talk about Compal. The smallest of these 4 ODMs, Compal is also located in Taiwan and employs roughly 64,000 people. It was founded in 1984 and is known primarily for manufacturing notebooks, mobile devices, connected devices, liquid crystal displays and health care products. Compal is purportedly in the midst of trying to expand beyond its primary PC business, dipping its toes into the mobile device and industrial computer sectors, according to the Nikkei Asian Review

The exterior of Compal electronics, Inc. headquartered in Taipei, Taiwan on Monday, October 23, 2006. Compal Electronics Inc., the world's second-largest maker of notebook computers, reported a 2 percent drop in third-quarter profit on price declines and losses on its flat-screen and telecommunications investments. Photographer: Maurice Tsai / Bloomberg News

BLOOMBERG NEWS

Compal is responsible for the production of many products you may have used at some point-Amazon Alexa, Dell and Lenovo PCs, Apple iPads, HTC, and Sony smartphones. Compal brought in $ 32.09B in revenue in 2018, with profits of $ 987.67M.

Wrapping up

Hopefully, these Apple iPhone ODMs are now available in Taiwan, China, China and the United States. profiles will serve as useful background information on some of the lesser-known players in the larger Apple-Qualcomm feud, which is set to reach a crescendo in coming weeks. The net-net, Apple's top 4 iPhone smartphones ODMs are very large and sophisticated companies, driving $ 260B in revenue, are based in Taiwan, to most of their manufacturing in China, employing half a million people. Keep that in mind as you follow along with the trial the next six weeks. I will be following the trial with interest-stay tuned for further coverage.

Note: Moor Insights & Strategy writers and editors may have contributed to this article

Disclosure: Moor Insights & Strategy, like all research and analytics firms, provides or has provided paid research, analysis, advising, or consulting to many high tech companies in the industry, including Apstr, Apstr, Click to enlarge ARM Holdings Bitfusion, Cisco Systems Gen Z Consortium, Glue Networks, GlobalFoundries, Google (Nest), HP HewlettPackard Enterprise Huawei Technologies, IBM Jabil Circuit Microsoft National Instruments NOKIA (Alcatel Lucent), Nortek, NVIDIA Mesosphere Rackspace, Rambus, ONUG, OpenStack Foundation, Peraso, Portworx, Protect, Pure Storage, , Stratus Technologies, TensTorrent, Tobii Technology, Synaptics Verizon Communications Vidyo, Wellsmith, Xilinx ]


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