In the middle of last year, Apple employees in Cork were told that the success of the corporation's new personal computer - the iMac - was a guarantee of the future prosperity of the plant. Just a few months later the iMac is an even bigger hit, but Cork is to lose jobs, as the corporation decides that it will no longer manufacture the iMac computers itself, but instead ask the giant Korean conglomerate, LG Electronics, to make them on its behalf.

Apple is not commenting in detail on the plan. But a company spokesman did confirm that it was asking a major international group to manufacture the iMac in a drive to increase efficiency on what is effectively a low profit margin consumer product. It is understood that Korean company LG Electronics, which manufactures in Mexico, Singapore and Newport in Wales, is to manufacture the iMac for Apple.

Contracting out production is not unusual in the international computer sector. The advantage for Apple is that LG, which has advanced capability in plastics moulding and high volume electronic production, can undertake the entire iMac production - including the computer casing - at a lower cost than Apple can manage itself.

At the moment, the iMac cases are shipped into Cork and assembled there, as one of three international Apple locations where the new computer is put together. In future LG - formerly Lucky Goldstar - will probably undertake the entire manufacturing process in one or two sites, benefiting from the enormous economies of scale which a high-volume production process can bring.

It is not clear whether the plant in Wales will be used, but in the long term the iMac will surely be made in a low-cost location, like LG's plants in Singapore and Mexico.

The future of the 500-plus employees remaining in Cork will now depend on the more upmarket Apple G3 range of office products and portable powerbooks. These are higher profit margin products and thus not as prone to the cost pressures which have led to the relocation of iMac production. The G3 products are successful and Cork's future will now rely on their growth, which in turn depends on the overall success of the Macintosh range and, more broadly, on the health of the European economy.

However, earlier optimism that Cork would prosper in line with the extraordinary success of the iMac has now been shown to be unfounded. Ironically, the move to introduce the new range of coloured iMacs may have made the computer even more popular, but by making production more complicated it added to Apple's desire to centralise the entire manufacturing process, leading to the decision to cut jobs in Cork.