Apple 2.0

Covering the business that Steve Jobs built

Apple picks trusted supplier to assemble 3G iPhone

March 28, 2008: 11:39 AM ET

chinese-iphone.pngIt should be no surprise that Apple has turned to Foxconn, the trade name for Hon Hai Precision Industry Co., to build the next generation iPhone.

China's Commercial Times reported early Friday that Foxconn was competing for the business, and the Dow Jones newswire, citing "a person familiar with the situation," now reports that Apple (AAPL) has awarded the Taiwan-based firm the exclusive contract. (link)

Apple has chosen a supplier it knows and trusts. Although it keeps a relatively low profile in the United States, Foxconn is one of the world's largest manufacturers of electronics and computer components. It built many of the first generation iPhones, as well as MacBook Pros, MacBook Airs, iPod nanos and Mac Minis.

It also makes motherboards for Intel (INTC), Dell (DEL) and HP (HPQ), Playstations for Sony (SNE), Wii's for Nintendo, Xbox 360s for Microsoft (MSFT), cell phones for Motorola (MOT) and Kindles for Amazon (AMZN).

Foxconn employs nearly half a million people and does most of its manufacturing in mainland China. It was China's largest exporter in 2007.

In 2006 the British press charged that it used abusive employment practices. Apple investigated those charges and declared them largely unfounded, although the company did find that some Foxconn employees were working longer than the 60 hours a week Apple's Code of Conduct finds acceptable.

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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