Apple's Initial iMac Manufacturing and Korean Partnership

Key Insight

Steve Jobs initially favored internal manufacturing for the iMac, believing Apple's factories in California, Ireland, and Singapore possessed the necessary skills for its intricate design, which he wanted to control. However, Apple's financial constraints and lack of expertise in building cathode ray tube (CRT) monitors, central to the iMac, forced a compromise. Apple handled the internal circuit boards, outsourcing the CRT production to a supplier, with final assembly (FATP) occurring at Apple sites to maintain quality control; Singapore was designated as a pilot manufacturing plant.

LG in South Korea, already an Apple monitor supplier, was a natural choice for the CRT component. LG, desperate to secure the order amidst the Asian financial crisis that brought the Korean economy to the brink of default and saw its currency lose half its value, offered to cover up-front tooling and prototype costs. This urgency was epitomized by a 'SURVIVE' banner displayed in their factory. Jobs, initially wary of Korea and preferring Japanese suppliers, accepted LG's enticing offer.

Apple embedded engineers, like Product Design manager David Lundgren, at LG's Gumi factory 24/7 through the 'Man on Mir' program, ensuring aesthetic vision and 'designed for manufacturing' principles were upheld. This collaboration involved a rigorous, zero-tolerance-for-defects culture, with Apple engineers frequently flying to Korea to resolve even minor issues. Due to the Gumi factory not being production-ready, the initial iMac models shown by Jobs were handcrafted by Apple's ID team. Despite a tepid initial audience response, the iMac, priced at $1199, quickly became America's bestselling computer, selling 278,000 units in six weeks and 800,000 by Christmas 1998, significantly boosting Apple's revenues and profits.