Pegatron profits fall short of expectations

One of Apple’s largest suppliers has reported lower profits than expected with the iPhone 5C being blamed for a decrease in its profits.

Taiwan’s Pegatron Corporation, which assembled the recently released smartphone, reported Q3 net profits of T$2.48 billion [£53 million] that came in below analyst forecasts but were in fact higher than the T$1.35 billion it made last year.

Pegatron became one of Apple’s largest suppliers earlier this year when Apple decided to switch from Foxconn to the Taiwanese company as the main supplier of the new iPhone model. This was mainly down to the fact that Pegatron offers a more affordable supply chain to Foxconn and had its first big job with Apple when it was contracted to assemble the iPad Mini in 2012.

As a part of this Pegatron agreed to take a lower cut of profits from the deal than Foxconn with Apple reportedly making the move to avoid the production of inferior devices that plagued it in the past.

Pegatron, which has dealt with Apple at a lower level for almost a decade, is another to have been accused of worker rights violations at its plants by the China Labor Watch [CLW]. In the summer CLW reported 86 separate labour rights violations, 36 legal violations and 50 ethical violations at three of the company’s Chinese facilities used to produce iPhones and iPads.

The iPhone 5C handset that is assembled by Pegatron has had a mixed start to life with data released in October showing that just 27 per cent opted for the device with 64 per cent going for the iPhone 5S, 23 per cent for the iPhone 4S and nine per cent the iPhone 4.

It’s this that has led to a reduction in the amount of phones being assembled by Pegatron and a drop in profits for the Taiwan-based firm.