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© igor stevanovic dreamstime.com Electronics Production | February 13, 2015

Thoughts on 'Pegatron and Foxconn: Apple’s low cost reality'

Labour cost structures need better illumination against the total cost structure of Brand Name (Apple) procuring from an EMS provider (Foxconn / Pegatron).
EDITOR'S NOTE_ This article is a guest comment from one of our readers regarding the recently published article "Pegatron and Foxconn: Apple’s low cost reality". Please feel free to leave a comment below or send an email to info[at]evertiq.com.
Working hours is a two edged sword. Workers whose basic salary is insufficient for daily needs are more than willing to earn more by doing extra hours, even excessive extra hours. While Brand Names (Apple) are over anxious to have fast ramp ups at any over time.

>95% of the EMS cost to Brand Name is material content. And >95% of material cost is determined by the Brand Name in supplier selection and cost contracts.

Less than 2% of the product is direct labour cost. Less than 1% of the retail price of a smart phone after VAT is labour cost. $61 M ( see later ) = $ cents per retail phone @ upwards of $700 retail price!

Your report of 8% Pegatron cost advantage over Foxconn ( = $ 61M ) is totally insignificant. With nimble competitors, every day launch means hundreds of $ millions loss for the Brand Name. @ $600 per product, $61M represent just over 100K products. Something minimal for first launch sales.

Apple has played this game for more that 5 years consistently claiming its doing everything possible to correct abuses. Yet each successive year we read the same story of worker overtime abuse, with the same excuses. Amazement at the technology roll out does not balance well with the sweatshop reports .

What’s at the core of this enormous imbalance between Brand Name ( Apple) success and worker remuneration and conditions can only be described as the unacceptable face of global corporation.

Apples technological business success has got itself into an integrity quagmire from which its reluctant to change.

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