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Apple allegedly shaking up supply chain as manufacturers no longer obtain components

post #1 of 65
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Apple's relationship with original equipment manufacturers has changed in a significant way, as manufacturing partners are no longer responsible for component procurement and production, according to a new report.

iPhone 5c
One side of steel reinforcement assembly being installed on the iPhone 5c.


Details on Apple's alleged supply chain adjustments were reported on Wednesday by DigiTimes, which claims that Taiwan-based manufacturing partners are now "purely" responsible for production of devices. The changes reportedly come as Apple has been able to obtain better supply of components from its own sources, allowing the company to cut out an unnecessary intermediary party and increase its profits.

The industry publication claims that the changes are expected to affect profitability of Taiwan manufacturers in the long term, as they generate some profit from procuring components for Apple.

But Apple is also said to have appeased its partners by letting them raise quotes to maintain their gross margins. As a result, Apple is reportedly expected to increase OEM partners' profits in the near-term by between 3 and 5 percent.

In addition, going forward OEMs will not be required to maintain standing component inventories, which DigiTimes claims will also reduce pressure on those partners.



Apple Chief Executive Tim Cook is regarded as an operational genius who has done an exceptional job in managing his company's supply chain partners. That success has allowed Apple to announce and ship new products in a matter of days, getting its hotly anticipated devices in the hands of consumers as quickly as possible. For example, Apple sold a record 9 million iPhone 5s and iPhone 5c units in those devices' first three days of availability.

As for what Apple's alleged changes in component procurement mean for the company going forward, Cook himself has cautioned that attempts to read into pieces of data regarding the supply chain are foolish endeavors. The CEO said earlier this year that it's "impossible" to interpret a specific data point as to what it means for Apple's overall business.

"The supply chain is very complex, and we obviously have multiple sources for things," Cook said. "Yields might vary, supplier performance might vary."
post #2 of 65
So is Apple getting all their components from Ireland now¿
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post #3 of 65
This should dramatically reduce the supply chains rumors as well.

One can hope.
post #4 of 65

They must have a war room somewhere in the bowels of One Infinity Loop where they monitor the whole supply chain in real time on theater-size screens much like the Pentagon monitors the whole world.

post #5 of 65
Apple's finger points to the moon; the stock analysts stare at the finger.
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post #6 of 65
Quote:
Originally Posted by tundraboy View Post
 

They must have a war room somewhere in the bowels of One Infinity Loop where they monitor the whole supply chain in real time on theater-size screens much like the Pentagon monitors the whole world.

Cue Stanley Kubrick and Dr Strangelove...

post #7 of 65
Quote:
Originally Posted by Robin Huber View Post

Apple's finger points to the moon; the stock analysts stare at the finger.

Cue LLoyd Bridges in Airplane.

Edit: Ahh... Memory fails -- it wasn't Lloyd Bridges


Edited by Dick Applebaum - 11/20/13 at 10:12am
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post #8 of 65
Sounds like a good change which will increase Apple's control over some factors, and ahve positive long term effects.
post #9 of 65
After thinking about for a few minutes, I thought this is an awesome move for Apple!

The move can already be seen in action with the $348 million investment sapphire technology. Soon Apple will not be dependent on a manufacturer finding sapphire to produce an Apple part. Apple will give manufacturer the sapphire.

Talk about removing procurement bottlenecks in its supply chain!!

This is how Apple's cash hoard should be used instead of helping others make a quick buck and saddling the company with $150 billion in absolutely unnecessary debt.
post #10 of 65
Robin huber for the win today. Bruce lee. Beautiful.
post #11 of 65
Quote:
Originally Posted by NeoTheta View Post

This should dramatically reduce the supply chains rumors as well.

One can hope.

I agree. Not only that, it can also help them move to where ever in the world they want. 

 

This, plus the Arizona sapphire buy, the Upstate NY foundries, the "California" pride, the Mac Pro being made in the USA, comments from Cook -- We will see maybe the iPhone 7 or 8 being Made in the USA

post #12 of 65

Of course the stock market and all their "geniuses" will twist this around and make it something bad causing AAPL to drop. We'll need to keep track of all the analysts saying this is bad for business even though Apple is giving the manufacturers a larger cut of the pie.

post #13 of 65

Get rid of some useless board members and get some Great Minds is also what Apple needs to do in addition to all the positive changes!

 

Get in Elon Musk and Ben Bernanke and get rid of EGO like Gore :err:


Edited by helicopterben - 11/20/13 at 10:15am
post #14 of 65
Quote:
Originally Posted by Robin Huber View Post

Apple's finger points to the moon; the stock analysts stare at the finger.

Nice Enter The Dragon reference.

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post #15 of 65
"Apple partners not ordering components. iPhones possibly see zero demand."
post #16 of 65
Quote:
Originally Posted by tundraboy View Post
 

They must have a war room somewhere in the bowels of One Infinity Loop where they monitor the whole supply chain in real time on theater-size screens much like the Pentagon monitors the whole world.

Quote:
Originally Posted by tmay View Post
 

Cue Stanley Kubrick and Dr Strangelove...

 

"Gentlemen, you can't fight in here. This is the War Room!"

http://www.youtube.com/watch?v=WI5B7jLWZUc

:smokey:

 

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post #17 of 65
Quote:
Originally Posted by PhilBoogie View Post

So is Apple getting all their components from Ireland now¿

That would make sense actually 1smile.gif
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From Apple ][ - to new Mac Pro I've used them all.
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post #18 of 65
Quote:
Originally Posted by starbird73 View Post

Quote:
Originally Posted by NeoTheta View Post

This should dramatically reduce the supply chains rumors as well.


One can hope.
I agree. Not only that, it can also help them move to where ever in the world they want. 

This, plus the Arizona sapphire buy, the Upstate NY foundries, the "California" pride, the Mac Pro being made in the USA, comments from Cook -- We will see maybe the iPhone 7 or 8 being Made in the USA


I think these are deliberate, logical steps in an end-game that will play out in the next 2 years.

The next "big things" from Apple are already here -- they just aren't visible, yet!
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post #19 of 65
It'll be just a matter of time until Apple buys the mining and oil companies. Own the entire supply chain, folks! 1wink.gif

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post #20 of 65
Quote:
Originally Posted by Robin Huber View Post

Apple's finger points to the moon; the stock analysts stare at the finger.

Meanwhile, Apple shareholders only get the finger in a place where the sun don't shine.

 

I guess when Wall Street heard this plan, they said Apple needs another share price reduction.  In a ever-rising market, Apple only seems to go down as though it was attached to some anchor buried deeply at the bottom of the ocean.  Whenever Jeff Bezos or Larry Page make a move, investors are happy.  Whenever Tim Cook makes a move, investors act as if they just took a dump in their pants.

 

Absolutely no one is going to understand this supply change adjustment and they certainly are not going to cheer it.  Apple keeps doing more and more things to anger both the tech industry and Wall Street.  Apple, the enigma, is hell-bent on scaring off potential big investors.

post #21 of 65
Quote:
Originally Posted by PhilBoogie View Post

So is Apple getting all their components from Ireland now¿

Ireland hasn't drunk the Kool Aid, remember? Haterade maybe 1wink.gif

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post #22 of 65
Quote:
Originally Posted by starbird73 View Post
 

I agree. Not only that, it can also help them move to where ever in the world they want. 

 

This, plus the Arizona sapphire buy, the Upstate NY foundries, the "California" pride, the Mac Pro being made in the USA, comments from Cook -- We will see maybe the iPhone 7 or 8 being Made in the USA

 

I have a strong suspicion that we are reaching a technological and economic tipping point that will make highly automated manufacturing in the U.S. (and other high wage industrialized countries) competitive again.  I expect a huge migration in factories (but sorry, not jobs) moving back from the far east into the U.S. Now if I can only figure out which robotics companies are going to feast on this bonanza so I could go long in their stock.

post #23 of 65
Quote:
Originally Posted by Suddenly Newton View Post

Ireland hasn't drunk the Kool Aid, remember? Haterade maybe 1wink.gif

True, not even an Apple Store there. Closest is Belfast.
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post #24 of 65
Quote:
Originally Posted by Constable Odo View Post
 

Meanwhile, Apple shareholders only get the finger in a place where the sun don't shine.

 

I guess when Wall Street heard this plan, they said Apple needs another share price reduction.  In a ever-rising market, Apple only seems to go down as though it was attached to some anchor buried deeply at the bottom of the ocean.  Whenever Jeff Bezos or Larry Page make a move, investors are happy.  Whenever Tim Cook makes a move, investors act as if they just took a dump in their pants.

 

Absolutely no one is going to understand this supply change adjustment and they certainly are not going to cheer it.  Apple keeps doing more and more things to anger both the tech industry and Wall Street.  Apple, the enigma, is hell-bent on scaring off potential big investors.

 

here comes Constapated Odo again.  Bitching about the stock again.  Even though Apple is up 30% the last 5 months.

 

Just buy a Nexus7 already.

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post #25 of 65
Quote:
Originally Posted by tundraboy View Post
 

 

I have a strong suspicion that we are reaching a technological and economic tipping point that will make highly automated manufacturing in the U.S. (and other high wage industrialized countries) competitive again.  I expect a huge migration in factories (but sorry, not jobs) moving back from the far east into the U.S. Now if I can only figure out which robotics companies are going to feast on this bonanza so I could go long in their stock.

You and me both. I agree. We will see some jobs come back/created by this, and higher paying ones, at that. It just will be far from a 1:1. Wall-E and his cousins will be the next wave of American manufacturing workers.

 

Guess I am fine with this. Those low wage manufacturing jobs were never coming back here. Will still be a net win for the US economy, even if relatively small.

 

Plus, no healthcare, labor laws, etc to contend with.

post #26 of 65
Quote:
Originally Posted by tundraboy View Post
 

 

I have a strong suspicion that we are reaching a technological and economic tipping point that will make highly automated manufacturing in the U.S. (and other high wage industrialized countries) competitive again.  I expect a huge migration in factories (but sorry, not jobs) moving back from the far east into the U.S. Now if I can only figure out which robotics companies are going to feast on this bonanza so I could go long in their stock.

 

Peps still need to maintain the robots.  Peps just need to get knowlege about robotics and computer science. 

 

No one's crying about the lack of cobbler jobs anymore.  Times change, people need to get new skills that match the world.

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post #27 of 65

What if Apple invests $50B in the best robotics?  Not even Samdung can match that.

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post #28 of 65
Quote:
Originally Posted by Robin Huber View Post

Apple's finger points to the moon; the stock analysts stare at the finger.

 

Bodhi Svaha.

post #29 of 65
Quote:
Originally Posted by sog35 View Post

What if Apple invests $50B in the best robotics?  Not even Samdung can match that.

Throwing money at a problem is not the best solution.
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #30 of 65

Apple points to the moon and Wall Street digs its nose.

 

They were wrong about Apple in 1998, 2001, 2005, and 2008.  I think they are wrong again in 2013

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post #31 of 65
Quote:
Originally Posted by Ireland View Post


Throwing money at a problem is not the best solution.

 

What problem?   How else are devices going to be made?  with pixie dust?  The main advantage Samsung has is its manufactering prowess.  Apple is address that problem with $10B investments in the supply change.  I expect even more in the future as units produced per year grows 20-30%

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post #32 of 65
Quote:
Originally Posted by sog35 View Post

Quote:

Originally Posted by Ireland View Post


Throwing money at a problem is not the best solution.

 

What problem?   How else are devices going to be made?  with pixie dust?  The main advantage Samsung has is its manufactering prowess.  Apple is address that problem with $10B investments in the supply change.  I expect even more in the future as units produced per year grows 20-30%

 

Right, money isn't ALWAYS the answer, but it often can help. And as sog35 has pointed out, this is the type of "problem" that money will help. It reduces Apple dependency on third parties. That is the Apple way. Do everything you can to not rely on others. Removes two things. 

1. Revenue from Samsung as Apple is a large customer. Won't hurt Samsung initially, but could in the future.

2. Bottlenecks - I am sure that Apple is (a) sick of not having enough product at launch and (b) sick of all the leaks. By moving more in house, with fewer eyes, and all internal eyes at that, they can truly surprise again. 

 

Honestly, I think the perception of lack of innovation and ho-hum keynotes are due to every last detail being leaked before hand. Chances are Apple's robots won't tweet blurry-cam shots of the iPhone 8...

post #33 of 65
Absolutely. WHAT on earth has GORE added to the mix to make Apple money? Is it a certain access? Apple doesn't need that anymore.

I know Jobs loved that idiot on the board whose company (INTUIT) made Quicken--yet Quicken for the Mac was NEVER as current as the WIndose versions--ever. I figure Jobs saw something else in him, a mentor, father-figure... don't know. But he was never able to get Quicken off the back foot. WHo else should go. Yes, Musk, and maybe some others who might be visionaries.
post #34 of 65
Apple rumor mill just released Apple will buy the utilities companies to supply the factory power and water to Apple owned equipments. The airplane and shipping companies that transport the Apple products, the airspace the workers got air from...Apple will also buy up all the media companies and fire all the analysts. Plus the US Social Security Dept that issue food stamps to the unemployed analysts, The Salvation Army who hands out used clothes and shoes to damn analysts.
post #35 of 65
Quote:
Originally Posted by helicopterben View Post
 

Get in ...Ben Bernanke...

 

Surely you jest.

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post #36 of 65
Quote:
Originally Posted by tundraboy View Post

Quote:
Originally Posted by starbird73 View Post

 
I agree. Not only that, it can also help them move to where ever in the world they want. 

This, plus the Arizona sapphire buy, the Upstate NY foundries, the "California" pride, the Mac Pro being made in the USA, comments from Cook -- We will see maybe the iPhone 7 or 8 being Made in the USA

I have a strong suspicion that we are reaching a technological and economic tipping point that will make highly automated manufacturing in the U.S. (and other high wage industrialized countries) competitive again.  I expect a huge migration in factories (but sorry, not jobs) moving back from the far east into the U.S. Now if I can only figure out which robotics companies are going to feast on this bonanza so I could go long in their stock.

I think there are some high-skilled, well-paying jobs associated with robotic high-tech manufacturing/assembly/testing/packaging -- but not as many low-paying assembly-line jobs,

My late father-in-law operated a punch-press for 40 years in a US Steel factory outside of Pittsburgh. Those jobs are gone! I read recently that much of the assembly lines for Apple products are manned by people -- not because they are needed, but because the Chinese Government requires it... kinda' a national union.

IMO, the keys to bringing manufacturing back to the US include:
  • automated high-volume manufacturing
  • high-skilled jobs setting up and monitoring the automated manufacturing
  • making the automated manufacturing machines/lines, themselves
  • ability to reset manufacturing machines/lines in days or weeks rather than months
  • rigorously managed and controlled supply chain

There will be a lot fewer, but higher-paying, higher-skilled jobs directly involved in the manufacturing.

But, the fanout of the "support community" needed by automated manufacturing will replace the lost assembly-line jobs...

I mean, the restaurants, dry cleaners, real estate agents, plumbers, school teachers, super market clerks, gardeners, UPS delivery men, road construction workers, salesmen, web article writers...


I'll give you an example how high-tech fanout can affect a community;

IBM transferred me to a Job in Palo Alto in 1973. We looked at houses in the area, including the sleepy little town of Cupertino. We bought a little South of there in the Village of Saratoga. I could drive the 15 miles to my job in Palo Alto in 25 minutes during rush hour;

In 1978 we opened a Computer store in Sunnyvale. I could drive the 7 miles to/from the store in 12-15 minutes during rush hour.

Right in the middle, about 4 miles from home is Cupertino (and this little company called Apple).

Skip ahead to 1989 when we sold the stores.

Apple and Cupertino had grown exponentially... thousands of people and jobs fanned out in the communities surrounding Apple. Several freeways had been built or extended. Rush hour had also been extended to any time between 6:00 AM to 7:00 PM...

It took 45 minutes to drive the 7 miles from our home in Saratoga to our Sunnyvale store.

Apple didn't do any manufacturing in Cupertino but a massive fanout of non-Apple jobs grew to support the growing Apple business...

I would SWAG estimate that for every [relatively] high-paying Apple Job -- that were 10-20 lower-paying non-Apple jobs.


And, here's the real benefit... the opportunities provided (both within and without Apple) are essentially unlimited -- to those who can focus and apply themselves.

It was a matter of pride to us that many of our computer store employees went to work at Apple and became successful in their own right!
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post #37 of 65
According to Leander Kahney, who wrote that new bio on Jony Ive, Apple moved manufacturing to China because they bent over backwards to do whatever Apple wanted. Kahney talked to a former Apple designer who worked for Ive and he said no American manufacturer was able to do the complex stuff they required at the volume they needed. When they approached Foxconn the CEO bent over backwards to do whatever Apple wanted.

I'd love it if Apple could find a way to keep this stuff secret. It sucked when an iPhone or iPad event comes up and 99% percent of what you see you've already seen on the internet for the past 6 months.
post #38 of 65
Quote:
Originally Posted by Dick Applebaum View Post


...I read recently that much of the assembly lines for Apple products are manned by people -- not because they are needed, but because the Chinese Government requires it... kinda' a national union.

 

Key elements of hiring in China (from a Canadian web site):  http://www.tradecommissioner.gc.ca/eng/document.jsp?did=132635

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post #39 of 65
Quote:
Originally Posted by Rogifan View Post

According to Leander Kahney, who wrote that new bio on Jony Ive, Apple moved manufacturing to China because they bent over backwards to do whatever Apple wanted. Kahney talked to a former Apple designer who worked for Ive and he said no American manufacturer was able to do the complex stuff they required at the volume they needed. When they approached Foxconn the CEO bent over backwards to do whatever Apple wanted.

I'd love it if Apple could find a way to keep this stuff secret. It sucked when an iPhone or iPad event comes up and 99% percent of what you see you've already seen on the internet for the past 6 months.

 

The secret word for the day is "robots".

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post #40 of 65
Remember when .Chrysler said Made in the USA. They bought most of the parts overseas and assembled them in the USA
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