The 'iPhone 7' effect: Android makers reportedly slow down chip orders ahead of Apple's launch

AppleInsider

With the next-generation iPhone expected to launch in just a few months, a new supply chain report claims that Android device makers are trimming their chip orders, apparently hoping to avoid direct competition with Apple's latest model.

Integrated circuit orders from Android handset makers have slowed down as chip inventories have piled up, according to supply chain sources who spoke with DigiTimes. In particular, lower-cost China-based handset makers are said to be slashing orders.

Cited as a key reason: Apple's "iPhone 7." Thursday's report indicated that Android handset makers "intend to avoid clashing head-on" with Apple's next handset, which is expected to debut by late September.

It should be noted that DigiTimes has an unreliable track record in predicting Apple's future product plans, but its supply chain sources do frequently share key overall trends and insights into the world of components and assembly for portable electronics.

It was said that Chinese Android phone vendors have cut orders for some models that have under-sold, while "several other Android vendors" have taken a "wait-and-see attitude" regarding new chip purchases.

New iPhone launches are typically the most heavily hyped event in the smartphone industry, as Apple's flagship handsets have proven to be the most popular individual models for years. It's expected that this year's so-called "iPhone 7" will ship in September with a thinner design and lacking a 3.5-millimeter headphone port, instead opting to provide audio out through the Lightning port.

maestro64

This is just a negotiation tactic in hopes chip supplier will lower pricing to get volume moving again. especially if they supply apple and these other suppliers at the same time. They Chip guys can not afford to give apple lower prices if their other customers are not buying as a higher price.

jkichline

I'm thoroughly expecting Android manufacturers to double-down on headphone jacks and include two with each so you can listen to two different streams of music simultaneously.

lkrupp

“It should be noted that DigiTimes has an unreliable track record in predicting Apple’s future product plans,”

Then why quote them on anything?

rotateleftbyte

and in other news, Samesung has increased production of its Galaxy 7 phones and Tablets because giving away a tablet with each phone has proved very successful despite generating next to no profits.
{just a harmless thought}

lkrupp

jkichline said:

I'm thoroughly expecting Android manufacturers to double-down on headphone jacks and include two with each so you can listen to two different streams of music simultaneously.

Now THAT’s innovation! Something Apple no longer has. /s

I can see the Samsung ad right now. A happy-go-lucky Samsung user offers his $5 plastic headphones that he got at a gas station to an iPhone 7 user only to find out they won’t work. Dude! What’s wrong with your iPhone? Waw...waw...waw...

Because that worked so well in those “iPhone users looking for charger outlets” ads. /s

nolamacguy

maestro64 said:

This is just a negotiation tactic in hopes chip supplier will lower pricing to get volume moving again. especially if they supply apple and these other suppliers at the same time. They Chip guys can not afford to give apple lower prices if their other customers are not buying as a higher price.

no. that isnt why one gets a volume discount. one gets a volume discount because the sheer volume ordered gives the supplier the profit they need, even if at a lower price per unit. this would be the same if they only had one customer and no others -- the larger the volume, the less the cost per unit.

Rayz2016

I don't believe Digitimes when it comes to Apple, so I doubt they're right about this. 

radarthekat

iPhone SE might also be making some inroads at the high end of the low end of the smartphone market.  Apple knows what it's doing.

maestro64

nolamacguy said:

maestro64 said:

This is just a negotiation tactic in hopes chip supplier will lower pricing to get volume moving again. especially if they supply apple and these other suppliers at the same time. They Chip guys can not afford to give apple lower prices if their other customers are not buying as a higher price.

no. that isnt why one gets a volume discount. one gets a volume discount because the sheer volume ordered gives the supplier the profit they need, even if at a lower price per unit. this would be the same if they only had one customer and no others -- the larger the volume, the less the cost per unit.

And how many deals have you negotiate with a supplier. You can only get a discount if the supplier operations can support it which means they have enough volume going through their factory to provide the economics of scale to drive cost down. Every supplier know how much they have to sell at each price point to get the profits they need. If they give apple 10% or 20% of the output at a 20% discount they have to be assure the other 80% to 90% of the business will make up the 20% discount.

I have negotiated enough of these deal on both sides of this equation to understand what is going on. There are times not being the biggest customer is in your best interest the supplier is willing to give you a lower price to ensure you stay as a customer since they need your volume to drive down overhead cost. They will give up margin on a small amount of business to keep volume up.

Trust me supplier need all the customer who make up the 80% to 90% more than they need Apple. without them they can not afford Apple business. They fact most of the Android guy are all signaling at the same time indicates they understand this and are trying to work a deal which maybe more favorable to them.