Existing Apple suppliers say GT Advanced promised too much, didn't diversify enough

2

Comments

  • Reply 21 of 45
    mpantonempantone Posts: 2,092member
    Quote:
    Originally Posted by malax View Post

     

    I don't think you understand the meaning of the word "anonymously."  If most of Apple's suppliers felt as GTAT did, word would get out.  In fact, it appears that GTAT management simply isn't ready to play in the big leagues.  They remind me of a little leaguer complaining about a coach that makes them practice their fundamentals; at every higher level the players take that for granted and look at those complaints as childish.


    Oh, I have a very clear concept of the word "anonymously."

     

    The fact of the matter is that actions speak louder and words here, because the words spoken by other suppliers don't say anything meaningful.

     

    Of course they are going to say that GT Advanced are whiny idiots.

     

    If you are doing business with Apple, you keep your mouth shut.

    If you aren't doing business with Apple but you'd like to, you keep your mouth shut.

    If you don't want to do business with Apple and you want to work with Apple's competitors, you keep your mouth shut.

     

    Complaining about your business partners is like denigrating your spouse in public. Tacky.

     

    And in big business, it's also unprofessional.

     

    If you are a happy Apple supplier, it will likely show up in your earning report.

     

    Apple themselves do not disclose the reasons why they occasionally change component suppliers: yield, quality, pricing, superior technology, etc. 

  • Reply 22 of 45
    GTAT thought they had to make big promises in order to secure an order from Apple, which is in all likelihood, true. It's a classic, "be careful what you wish for" scenarios, where getting what you think you want can be the thing that kills you.

    I've worked hard over the past decade building a product that most people though was impossible and the thing I heard over and over was "Go get the orders, to prove the product is something people want", as if selling the product was the hard part. Generally, when you have something no-one else has, selling is not the big issue. Making sure you can produce and ship in quantity, on time and at the quality needed, is the far more complicated issue at hand.
  • Reply 23 of 45
    dws-2dws-2 Posts: 277member

    The mistake here is that Apple got involved with people who blame others for their own failures, both in negotiations and implementation. The sneaky timing of the stock options by the executives also shows a general lack of regard for other people (i.e. shareholders).

  • Reply 24 of 45
    mpantone wrote: »
    That would end any potential future business with Apple.

    Also, other companies might hesitate to do business with a bunch of whiners and litigation-happy suppliers.

    So no, silence doesn't say anything in this case.

    Silence says whatever you want it to say. You, for example, just claimed their silence means they are afraid of losing future business with Apple.

    What you should say is: "(their) silence doesn't say what you think it says, it says what I think it says."
  • Reply 25 of 45
    mpantonempantone Posts: 2,092member
    Quote:
    Originally Posted by Suddenly Newton View Post



    Silence says whatever you want it to say. You, for example, just claimed their silence means they are afraid of losing future business with Apple.



    What you should say is: "(their) silence doesn't say what you think it says, it says what I think it says."

    They are probably contractually obligated to shut their mouths, whether or not they want future business with Apple or not.

     

    I agree, silence can say anything.

     

    In the end however, there are simply component suppliers who do business with Apple and those who do not. Who is better off? Just look at earnings. After all, all these companies ultimately have to answer to shareholders at the end of the day. The primary duty of any publicly-traded company is to increase shareholder value.

  • Reply 26 of 45
    jungmarkjungmark Posts: 6,926member
    The lesson from all this: don't bullshit, over promise and then under deliver.
  • Reply 27 of 45
    mpantonempantone Posts: 2,092member

    That's right. Don't think you can do this to Apple and get away with it.

     

    If you're working with Nokia, Samsung, HTC, BlackBerry, well, feel free to give it a shot.

     

    ;) 

  • Reply 28 of 45
    Quote:

    Originally Posted by mpantone View Post

     

    That's right. Don't think you can do this to Apple and get away with it.

     

    If you're working with Nokia, Samsung, HTC, BlackBerry, well, feel free to give it a shot.

     

    ;) 




    Most of those companies would be giddy at the prospect of someone being willing to even acknowledge them.

  • Reply 29 of 45
    Quote:
    Originally Posted by mpantone View Post



    Duh, what else would they say?



    They want to appear smart, not stupid like GT Advanced.



    You didn't get it. The key is ensure you have more than Apple as your customer. Business common sense. The rule: A big customer contracting with the smaller supplier will often require the business make substantial capital investments in order to accommodate them. That will be a large debt load. If you allow it, the big guy will control your business, and if the big guy leaves, your business is stuck with an infrastructure and debt it cannot afford. That is likely the GTAT/Apple scenario. 

     

    Putting this into the context of a girl and a married man, this is a one-night stand with a promise of marriage. The ride might be great, your now living in luxury, and you've given up your lifestyle for his, if he leaves you with offspring, you merely got f*ked. 

  • Reply 30 of 45
    mpantonempantone Posts: 2,092member

    I know that. They know that. It doesn't need to be said.

     

    Again, at the end of the day, these companies need to answer to shareholders. Being a one-trick pony doesn't bode well in terms of running a stable business.

     

    Still, I stand by my statement that these suppliers stated the obvious.

     

    The competition to be an Apple supplier is fierce, but so is the competition to stay an Apple supplier because shareholders expect increasing value.

  • Reply 31 of 45
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    This really isn't that unusual for a relationship between suppliers and big companies. Most big industries place a lot of trust in small component suppliers, and expect those guys to deliver.

     

    GTAT should have just been happy (and Apple shareholders should BE happy) that Apple had a plan-B and was willing to wait until the iPhone 6S (or later) to get the sapphire screens.


    Big companies can put all of the responsibility on small companies. Not sure about trust (due diligence).

     

    If a supplier fails by causing the big company' product to fail, the big company can point at supplier. Put the responsibility on the  supplier to perform. 

  • Reply 32 of 45
    boredumbboredumb Posts: 1,418member

    Hey, Apple - stay tough as hell, don't ever change!

    The reasons and the proof are on my desk, in my laptop bag, that phone in my pocket,

    the strength of wifi in my home, the visual quality of streamed content, etc. etc. etc. etc. ad infinitum...

  • Reply 33 of 45
    malaxmalax Posts: 1,598member
    Quote:
    Originally Posted by mpantone View Post

     

    I know that. They know that. It doesn't need to be said.

     

    Again, at the end of the day, these companies need to answer to shareholders. Being a one-trick pony doesn't bode well in terms of running a stable business.

     

    Still, I stand by my statement that these suppliers stated the obvious.

     

    The competition to be an Apple supplier is fierce, but so is the competition to stay an Apple supplier because shareholders expect increasing value.


    That's the point!  Newspapers generally don't waste time printing stories that are obvious.  If many suppliers hated working with Apple, the WSJ would have found them and printed THAT story.  Obviously the companies wouldn't publish press releases to that effect, but industry insiders would know the scuttlebutt.  Instead word on the street is that Apple is fair but really tough.  Unlike what GTAT is asserting.

  • Reply 34 of 45
    Quote:
    Originally Posted by Rogifan View Post





    WSJ has zero credibility when it comes to Apple in my book. Plus I know when I'm coming to sites like this what to expect. Apple stock was trading at around $520 when that WSJ iPhone 5 order cuts hit the front page. After, the stock was trading at around $485 and went down from there.



    I am happy, anytime AAPL is trading at a discount.

  • Reply 35 of 45
    Quote:

    Originally Posted by th3uglytruth View Post



    Gutierrez planned to get rich fast all along.....he is laughing and having naked babes beside him right now.....



    Maybe. But I'm not sure if his assets might have been frozen in light of the SEC investigation. We haven't heard that but sometimes it happens without much notice. The SEC certainly wouldn't want him to move this money to Bahamas or Cayman Islands right now. 

     

    And I suspect that he'll be lacking for babe-company for a few years. That'll take time to wend through the court system though.

  • Reply 36 of 45
    Quote:

    Originally Posted by Rogifan View Post



    WSJ has zero credibility when it comes to Apple in my book. Plus I know when I'm coming to sites like this what to expect. Apple stock was trading at around $520 when that WSJ iPhone 5 order cuts hit the front page. After, the stock was trading at around $485 and went down from there.

    Remember though that there's a difference between "editorial" content" and "analyst" content.

     

    To your point, though, WSJ doesn't always keep them as separate as it should.

  • Reply 37 of 45
    mj webmj web Posts: 918member
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     



    It's going to be an issue that requires addressing. Apple's success is beginning to expose a lot of flaws in the supply-side of the economy. They've been working on some of them, like building factories in Brazil (probably not the best idea given the union issues that popped up), but a lot of companies are going to have to make a lot of capital expenditures to get things moving more efficiently.

     

    I'd also love if Apple went away from launching everything in September/October.


    I'm still waiting for a iMac Retina 5K I order on Holloween so your point is well taken. 

  • Reply 38 of 45
    sockrolidsockrolid Posts: 2,789member

    Originally Posted by AppleInsider View Post



    ... the implosion of GT Advanced, a sapphire maker that contracted with Apple but couldn't deliver the material as promised.

     

    Amateurs.

     

    The world is full of amateurs.

     

    [Update: Well, OK, to be fair, from the outside it looks like GT Advanced acted like a startup that tried to scale up to a full-blown multi-billion dollar company without progressing through the normal growing-up phases.  Sometimes the brilliant founder is the totally wrong person to run a big company with day-to-day logistics and production issues.]

  • Reply 39 of 45
    dasanman69dasanman69 Posts: 13,002member
    sockrolid wrote: »
    Amateurs.

    The world is full of amateurs.

    [Update: Well, OK, to be fair, from the outside it looks like GT Advanced acted like a startup that tried to scale up to a full-blown multi-billion dollar company without progressing through the normal growing-up phases.  Sometimes the brilliant founder is the totally wrong person to run a big company with day-to-day logistics and production issues.]

    And full of these as well.

  • Reply 40 of 45
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     



    It's going to be an issue that requires addressing. Apple's success is beginning to expose a lot of flaws in the supply-side of the economy. They've been working on some of them, like building factories in Brazil (probably not the best idea given the union issues that popped up), but a lot of companies are going to have to make a lot of capital expenditures to get things moving more efficiently.

     

    I'd also love if Apple went away from launching everything in September/October.




    this and the pegatron comments make me think there are 2 major types of 'suppliers'

     

    1) someone who has to develop new science/process to meet Apple's exacting needs

    2) someone who is just assembling stuff for Apple.

     

    Those in category 1 (Samsung, TSMC, GTAT, Corning, Authentec, probably others) have are truly partners.  They need to trust each other, and understand that there are few that can do what they do and bargain not from strength, but from mutual risk reduction.  They have to be smarter than Apple in what they do (I don't think GTAT was that), and they have to be more honest with Apple in timelines and factual information.   The payout is huge, but so is the risk, and Apple has evolved to place all the risk and variance on the suppliers, in return for a very healthy cash flow (usually payment in advance, to seed the product development ).

     

    Those in category 2 are piece work suppliers (pegatron is one of these)... they have to deliver better, live by Apple's rules, and for the most part deal with the threat of loss of Apple's business and constantly do more faster.   Again, they get paid in advance (or as items ship), but may have sudden drops in income due to market variance (apple can stop production any day now for a day or a month, keeping Apple Inventories low, but keeping suppliers guessing as to their next months orders.

     

    Both have to assume Apple is the driver of the deal, and they have to have alternatives for the survival of the product/line (alternative clients, products).  Category 1 may be paid more because of the risk (no one else wants what Apple wants), but there is an expectation then that you are fully capable of meeting Apple's needs, and not the least of those is transparency of status.

     

    GTAT failed on both counts.  Bet the bank with Apple, and no other real clients, and then held Apple in the dark too long, and tried to keep planned long term profits, instead of focusing on delivery at a reduced return on equity.

Sign In or Register to comment.