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

Posted:
in General Discussion edited January 2014
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."
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Comments

  • Reply 1 of 59
    So is Apple getting all their components from Ireland now¿
  • Reply 2 of 59
    This should dramatically reduce the supply chains rumors as well.

    One can hope.
  • Reply 3 of 59

    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.

  • Reply 4 of 59
    Apple's finger points to the moon; the stock analysts stare at the finger.
  • Reply 5 of 59
    tmaytmay Posts: 2,755member
    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...

  • Reply 6 of 59
    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

    1000
  • Reply 7 of 59
    slurpyslurpy Posts: 5,008member
    Sounds like a good change which will increase Apple's control over some factors, and ahve positive long term effects.
  • Reply 8 of 59
    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.
  • Reply 9 of 59
    Robin huber for the win today. Bruce lee. Beautiful.
  • Reply 10 of 59
    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

  • Reply 11 of 59
    rob53rob53 Posts: 1,880member

    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.

  • Reply 12 of 59

    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:

  • Reply 13 of 59
    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.

  • Reply 14 of 59
    jungmarkjungmark Posts: 6,544member
    "Apple partners not ordering components. iPhones possibly see zero demand."
  • Reply 15 of 59
    bigpicsbigpics Posts: 1,337member
    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!"







    :smokey:



     

  • Reply 16 of 59
    MacProMacPro Posts: 17,382member
    philboogie wrote: »
    So is Apple getting all their components from Ireland now¿

    That would make sense actually :)
  • Reply 17 of 59
    starbird73 wrote: »
    neotheta wrote: »
    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!
  • Reply 18 of 59
    It'll be just a matter of time until Apple buys the mining and oil companies. Own the entire supply chain, folks! ;)
  • Reply 19 of 59
    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.

  • Reply 19 of 59
    philboogie wrote: »
    So is Apple getting all their components from Ireland now¿

    Ireland hasn't drunk the Kool Aid, remember? Haterade maybe ;)
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