Apple has transferred orders of printed circuit boards (PCB) to Taiwanese suppliers due to some issues with its Chinese supplier, a report says.

Cupertino tech giant Apple is ramping up production of the iPhone 11 series and is working on handsets with 5G capabilities. That said, it has decided to transfer PCB orders from its Chinese supplier to Taiwanese suppliers Zhen Ding Technology Co, Ltd. and Flexium Interconnect Inc., Chinese news site UDN reported (translated via Taiwan News). The PCBs are used in the aforementioned devices.

The company's decision to move orders away from Chinese supplier Suzhou Dongshan Precision Manufacturing Co. Ltd. was caused by production disruptions and low yield rates (or high defect rates), the report said.

The Chinese supplier has a large PCB factory in China, and holds the eighth spot in the PCB business globally. Its soft PCB subsidiary, despite holding third spot in the global soft PCB business, suffered a production crisis recently. This crisis led to gaps in soft PCB deliveries which, ultimately, affected Apple's production schedule. This led Cupertino to look for suppliers elsewhere, particularly in Taiwan.

The two Taiwanese companies haven't publicly confirmed or denied Apple's orders. Zhen Ding simply said it is capable of meeting any demand its client has. Flexium, on the other hand, said it has a positive outlook toward “new market demand” and is expecting production to be “a bit busier than usual” in the first quarter of next year.

“ Red supply chain”

Suzhou Dongshan is one of the companies included in the Asian country's so-called “red supply chain.” Companies included in the red supply chain receive favorable treatment from the Chinese government so they squeeze out foreign competitors in the production process. These companies have robbed Taiwanese manufacturers of potential orders from Apple in recent years.

The report said Zhen Ding and Flexium are “leading the counterattack” against the pressure applied by companies in the red supply chain, and have received large-scale orders of components used for Apple's latest iPhones.

The orders are expected to help Zhen Ding's bottom line in the fourth quarter of this year. Its medium- and high-level production lines are reaching full capacity, the report said, prompting Flexium to step in to meet the demand.

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