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China COVID Controls Makes Apple Supplier Pegatron ‘Emphasize’ Expansion Elsewhere

Logo of an Apple store is seen in Washington, US, January 27, 2022. (Reuters)
Logo of an Apple store is seen in Washington, US, January 27, 2022. (Reuters)
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China COVID Controls Makes Apple Supplier Pegatron ‘Emphasize’ Expansion Elsewhere

Logo of an Apple store is seen in Washington, US, January 27, 2022. (Reuters)
Logo of an Apple store is seen in Washington, US, January 27, 2022. (Reuters)

China's recent lockdowns to control the spread of COVID-19 have made Apple Inc iPhone assembler Pegatron Corp "emphasize" its expansion in other countries, a senior executive at the Taiwanese firm said on Wednesday.

In April, Taiwan-headquartered Pegatron suspended operations at its Shanghai and Kunshan plants in China due to strict COVID-19 protocols, impacting production and deliveries. China has since lifted those restrictions.

However, the company is still facing labour shortages, exacerbated by COVID restrictions in China, leading the company to "emphasize" its expansion plans elsewhere, President Liao Syh-jang told an annual shareholder meeting in Taipei.

"We faced COVID controls for two months. We couldn't have assessed that in advance, so that makes me emphasize our expansions in Vietnam, India, Indonesia, and North America, to solve our labor shortage, the gap between peak and low seasons, and to increase the utilization of our production capacity."

In recent years, Pegatron has sought to expand its footprint in Southeast Asia and North America.

Chairman T.H. Tung added that their customers had "different reasons" for setting up factories in Vietnam, India and Mexico.

"But one shared factor is the ability to reduce concentration in Shanghai, Suzhou, Chongqing," Tung said, adding that recruiting staff in China has become increasingly difficult over the past seven to eight years.

Tung said that with the COVID pandemic easing globally, China coming out of its lockdowns to control the coronavirus and the electronics industry's peak season coming later in the year, the rest of 2022 should be much better for the company.

"Combining these factors, I expect the second half of the year to be better, or a lot better, than quarter two."

Taiwanese firm Foxconn, the world's largest contract electronics maker which also assembles iPhones, last month predicted more stable supply in the second half of 2022.

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Google Loses Appeal in Antitrust Battle with Fortnite Maker

Audience members gather at Made By Google for new product announcements at Google on Aug. 13, 2024, in Mountain View, Calif. (AP Photo/Juliana Yamada, File)
Audience members gather at Made By Google for new product announcements at Google on Aug. 13, 2024, in Mountain View, Calif. (AP Photo/Juliana Yamada, File)
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Google Loses Appeal in Antitrust Battle with Fortnite Maker

Audience members gather at Made By Google for new product announcements at Google on Aug. 13, 2024, in Mountain View, Calif. (AP Photo/Juliana Yamada, File)
Audience members gather at Made By Google for new product announcements at Google on Aug. 13, 2024, in Mountain View, Calif. (AP Photo/Juliana Yamada, File)

A federal appeals court has upheld a jury verdict condemning Google's Android app store as an illegal monopoly, clearing the way for a federal judge to enforce a potentially disruptive shakeup that's designed to give consumers more choices.

The unanimous ruling issued Thursday by the Ninth Circuit Court of Appeals delivers a double-barreled legal blow for Google, which has been waylaid in three separate antitrust trials that resulted in different pillars of its internet empire being declared as domineering scofflaws monopolies since late 2023, The AP news reported.

The unsuccessful appeal represents a major victory for video game maker Epic Games, which launched a legal crusade targeting Google’s Play Store for Android apps and Apple’s iPhone app store nearly five years ago in an attempt to bypass exclusive payment processing systems that charged 15% to 30% commissions on in-app transactions.

The jury's December 2023 rebuke of Google's app store for Android-powered smartphones began a cascade of setbacks that includes monopoly judgements against the company's ubiquitous search engine last year and the technology underlying its digital ad network earlier this year.

Although not as lucrative as Google's search engine or ad system, the Play Store for Android apps has long been a gold mine that generated billions of dollars in annual revenue by taking a 15% to 30% cut from in-app transactions funneled through the company's own payment processing system.

Following a month-long trial, a nine-person jury determined that Google had rigged its system to thwart alternative app stores from offering better deals to consumers and software developers. That verdict resulted in US District Judge James Donato ordering Google to tear down digital walls shielding the Play Store from competition, triggering the company's appeal to overturn the jury's finding and void the judge's mandated shakeup.

But a three-judge panel that heard Google's appeal in February rejected its lawyers' contention that Donato erred by allowing the case to be determined by a jury that deviated from the market definition outlined by another federal judge who mostly sided with Apple in Epic's case against the iPhone maker's app store.

Epic's lawsuit "was replete with evidence that Google’s anticompetitive conduct entrenched its dominance, causing the Play Store to benefit from network effects," the judges wrote in the decision.

The ruling “will significantly harm user safety, limit choice, and undermine the innovation that has always been central to the Android ecosystem,” Google’s vice president of regulatory affairs Lee-Anne Mulholland said in a statement.

Unless Google can extend the enforcement delay placed on Donato's order issued last October, the company will have to begin an overhaul that includes making the Play Store's entire library of more than 2 million Android apps available to would-be rivals and also help distribute the alternative options. Google has argued that the required revisions will raise privacy and security risks by exposing consumers to scam artists and hackers masquerading as legitimate app stores.

But Epic's lawyers have ridiculed Google's warnings about the changes as scare tactics in a desperate attempt to protect the fortunes of its corporate parent Alphabet Inc.

Although Epic fell short in its attempt to have the iPhone's app store declared a monopoly, that case resulted in a judge issuing an order that required Apple to surrender exclusive control over the payment processing of in-app transactions and allow links to alternative systems without collecting a commission.

Besides being hit with Donato's order, Google still faces further trouble ahead that could leave an even bigger dent in its finances.

As part of the effort to address Google’s illegal monopoly in search, a federal judge is weighing a proposal by the US Justice Department that would require the sale of its Chrome web browser and ban the multibillion dollar deals that company has been making with Apple and others to lock-in its search engine as the main gateway to the internet.

Google is also facing a proposed breakup of its advertising technology as part of the countermeasures to its monopoly in that business. A trial on that proposal is scheduled to begin in September.