Taiwan losing its grip on iPhone supply chain

Production of the hot-selling iPhone 6 is bringing business to a number of Taiwanese technology firms and boosting factory orders on the mainland, although supplier competition and sourcing changes at Apple have taken a bite out of the region's dependence on the popular handsets.

Apple has contracted Taiwanese tech giant Hon Hai Precision to make all its iPhone 6 Plus handsets and 70 per cent of basic iPhone 6 orders, analysts say. Pegatron, based in Taipei, will assemble the other 30 per cent, the Market Intelligence and Consulting Institute in Taiwan estimates.

"Most of the worldwide assembly for the iPhone 6 range will take place in China, because that is where the lowest costs and biggest factories are located," said Neil Mawston, global wireless practice executive director at Strategy Analytics in Britain.

But as Apple changes specs from earlier iPhone models and has the pick from a bigger field of suppliers worldwide, mainland and Taiwanese companies are getting fewer orders compared to older iPhones.

"The components for the iPhone 6 portfolio come from a very globalised supply chain," Mawston said.

Taiwan will pocket just US$25 to US$30 from the total US$245 to US$255 manufacturing bill of materials from each iPhone 6 handset, according to the Market Intelligence and Consulting Institute.

Taiwanese firms, many of which send orders to the mainland for manufacturing, are receiving less from the iPhone 6 compared to earlier models largely because supply chain competition has pushed prices lower.