Foxconn Will Not Manufacture The iPad 5 And The iPad mini 2

Cupertino based Apple will change the manufacturer of its next generation tablets the iPhone 5 and the iPad mini 2; at least part of the manufacturing process will be moved from Foxconn, the Taiwanese multinational company that manufactures electronics and is also a long time Apple partner. Analysts suggested the move when the Taiwanese company’s manufacturing revenue waned considerably in April. Initially, this drop in revenue made analysts think that iPad and iPhone sales abruptly dropped last month (because Foxconn is the main supplier for these Apple products). However when Apple presented the quarterly reports it was clear that there was no drop in the sales of Apple’s iPad or iPhone lines; on the contrary, it was quite clear that iPad sales were actually very good. The only logical conclusion after Apple’s quarterly report was that Apple is moving part of its manufacturing business from Foxconn, a move that will have effects on the next generation iPads – the iPad 5 and the iPad mini 2.

So what exactly made Apple move away from its long time manufacturing partner, Foxconn? There seem to be two reasons for the split. The first reason has to do with Foxconn becoming less and less dependable. With two very important executives leaving Foxconn, the Taiwanese company’s quality control got worse and worse, leading to a situation in which Apple was forced to scrap thousands of iPhones before these units reaching stores’ shelves as they were faulty; this resulted in a minor trouble with the supply of the iPhone 5 during the smartphone’s launch.

The second reason for Apple’s decision to give up on Foxconn is Apple’s recent tendency to cut business ties with manufacturers that also make tablets for the competing ecosystem, Android. Foxconn is one such manufacturer; besides the contract for iPad, Foxconn also manufactures Android tablets. The reason for this tendency is that Apple believes that these factories are the cause of its products’ secrets leaking to companies that make identical copies of Apple’s products. A vast majority of these product leaks happens at the assembly lines because workers from there get the chance to view the components and products that are assembled, long before Apple makes an official announcement about them. Apple moving away from Foxconn is consistent with the fact that there have been no leaks about the iPad 5 and the second generation iPad mini, as both of these tablets will most likely be released soon and they may actually already be in production.

In addition to silently replacing Foxconn, Apple has also managed to keep the name of Foxconn’s replacement a secret. We will probably learn the name of Apple’s new supplier after the second generation iPad mini and the iPad 5 will be in mass production. But until then we won’t know what the company behind the iPhone and the iPad has in mind: do they want a manufacturing partner that is exclusive to them, or do they want to build their own factory and depend on less (or no) suppliers? On the other hand, Foxconn doesn’t shy on putting the blame on Apple regarding the low revenue, which would imply that iPad sales dropping is the reason behind Foxconn’s low revenue. However, since Apple’s report shows that iPad sales are very strong this might mean that Foxconn is holding a grudge against Apple for Apple’s move. Which we found rather strange, as instead of trying to change Apple’s mind and convince them not to give up on their supply contract, Foxconn is actually publicly attacking Apple. This kind of behavior can only lead to a definitive business separation between the two companies.