Apple using lower parts quotes, new suppliers to keep up high profit margins - report

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A variety of Apple suppliers -- including some stalwarts -- are reportedly being hit by lower price quotes from the company, which is likewise said to be searching for new suppliers to maintain high profit margins on its products.




Companies like Largan Precision, Pegatron, and even Foxconn are being impacted, DigiTimes sources claimed on Tuesday. Largan for instance is allegedly facing competition for camera module orders from Japan's Kantatsu, while Foxconn and Pegatron are both dealing with Apple adding new manufacturers such as Wistron.

Wistron has previously been rumored as a third manufacturer for the "iPhone 7," along with Foxconn and Pegatron. Using multiple manufacturers allows Apple to both keep up with demand and force suppliers to accept lower prices for fear orders will be lost to competitors.

Taiwan's printed circuit board makers are meanwhile said to be slashing prices in a bid to win Apple orders, with only two firms -- Flexium and Zhen Ding -- holding onto stable profits. To compensate, companies are trying to expand orders with other clients while improving technologies, yield rates, and output quality to gain an edge.

Japanese suppliers are said to be taking the hardest hit from Apple's lowballing, since their own quotes are usually higher than rivals based in China and Taiwan. Chinese firms are claimed to have the upper hand in pricing, but suffer from problems in quality, yield rates, and unstable economics.
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Comments

  • Reply 1 of 35
    cintoscintos Posts: 104member
    "lowballing"???The article uses the term "quote" when referencing Apple's actions. The supplier quotes and Apple bids for parts. Perhaps some of these manufacturers should stop providing loss-leader parts to the loss-leader handset manufacturers. They are complacent in the "race to the bottom" that seems to be in vogue these days.
    lolliverbaconstangjony0
  • Reply 2 of 35
    cnocbuicnocbui Posts: 3,613member
    iPhone - made from the cheapest parts available.  How comforting.  Good thing that you you don't get what you pay for.
    singularityxixolord amhran
  • Reply 3 of 35
    thewhitefalconthewhitefalcon Posts: 4,453member
    It's the same way the automakers operate. 
    mike1lolliverbaconstang
  • Reply 4 of 35
    zroger73zroger73 Posts: 696member
    Great. Now that Apple established the most reliable smartphone ever, here comes the cost-cutting and associated decreases in reliability. Similar attitudes and actions have bruised Honda's reputation.
    xixo
  • Reply 5 of 35
    isteelersisteelers Posts: 738member
    Just business as usual. Large businesses have more pull with regards to pricing. Diversifying suppliers is what they have always tried to do and is a good thing.  Competition is good right?
    mike1lolliverbaconstangmacky the mackyjony0
  • Reply 6 of 35
    wizard69wizard69 Posts: 12,647member
    zroger73 said:
    Great. Now that Apple established the most reliable smartphone ever, here comes the cost-cutting and associated decreases in reliability. Similar attitudes and actions have bruised Honda's reputation.

    Sadly I suspect there is a lot of truth in this.  I do hope that Apple hasn't fallen victim to the Wall Street disease.  
    xixolord amhrandasanman69cnocbui
  • Reply 7 of 35
    jurassicjurassic Posts: 89member
    cnocbui said:
    iPhone - made from the cheapest parts available.  How comforting.  Good thing that you you don't get what you pay for.
    How dare a business run itself like a business, and try to optimize it's expenditures... (only if it is Apple
    nolamacguylolliverjony0
  • Reply 8 of 35
    mknelsonmknelson Posts: 271member
    cnocbui said:
    iPhone - made from the cheapest parts available.  How comforting.  Good thing that you you don't get what you pay for.
    I'm unclear - it looks to me like they're using lower cost quotes for hard-ball negotiations with existing suppliers.

    Now, if only they'd pass that on to their reseller network rather than regularly increasing costs and restricting some product lines.
  • Reply 9 of 35
    rogifan_newrogifan_new Posts: 3,676member
    jurassic said:
    cnocbui said:
    iPhone - made from the cheapest parts available.  How comforting.  Good thing that you you don't get what you pay for.
    How dare a business run itself like a business, and try to optimize it's expenditures... (only if it is Apple
    And everyone else does the same. At some point cost cutting has to impact quality no?
    xixodasanman69
  • Reply 10 of 35
    xixoxixo Posts: 417member
    wizard69 said:
    zroger73 said:
    Great. Now that Apple established the most reliable smartphone ever, here comes the cost-cutting and associated decreases in reliability. Similar attitudes and actions have bruised Honda's reputation.

    Sadly I suspect there is a lot of truth in this.  I do hope that Apple hasn't fallen victim to the Wall Street disease.  
    When SJ ran things, pleasing the customer was the focus. Now that TC runs things, pleasing the shareholder is the focus.
    edited July 2016 dasanman69
  • Reply 11 of 35
    appexappex Posts: 687member
    No surprise here. Other times Apple uses high-quality parts like RAM and SSD, yet charge 2 to 3 times more for the very same make and model. Just check out upgrades on Apple store. Shocking!
    dasanman69
  • Reply 12 of 35
    mike1mike1 Posts: 1,786member
    xixo said:
    wizard69 said:

    Sadly I suspect there is a lot of truth in this.  I do hope that Apple hasn't fallen victim to the Wall Street disease.  
    When SJ ran things, pleasing the customer was the focus. Now that TC runs things, pleasing the shareholder is the focus.
    You can please the customers all you want, but if you don't make money then you won't be pleasing them for very long.
    This is just good business practices.
  • Reply 13 of 35
    sricesrice Posts: 114member
    BREAKING NEWS: For profit company operating for profit.
    slprescottdasanman69mike1lolliver
  • Reply 14 of 35
    kent909kent909 Posts: 695member
    mike1 said:
    xixo said:
    When SJ ran things, pleasing the customer was the focus. Now that TC runs things, pleasing the shareholder is the focus.
    You can please the customers all you want, but if you don't make money then you won't be pleasing them for very long.
    This is just good business practices.
    Thats right. Apple must be down to their last $140B in the bank. Better kick someones ass to keep the whiny little stockholders happy.
  • Reply 15 of 35
    pscooter63pscooter63 Posts: 899member
    appex said:
    No surprise here. Other times Apple uses high-quality parts like RAM and SSD, yet charge 2 to 3 times more for the very same make and model. Just check out upgrades on Apple store. Shocking!
    Let's see.  A certain aspirational car model I own needed it's Bluetooth module replaced.  Said module was a couple of C-notes.

    That's how it goes with aspirational brands. Maybe you should have researched a little more carefully before jumping in?  I mean, there's always alternatives.

    Having it both ways isn't a right.
  • Reply 16 of 35
    croprcropr Posts: 871member
    jurassic said:
    cnocbui said:
    iPhone - made from the cheapest parts available.  How comforting.  Good thing that you you don't get what you pay for.
    How dare a business run itself like a business, and try to optimize it's expenditures... (only if it is Apple
    I don't mind that Apple tries to reduce the cost of the components it needs to build an iPhone.  But I would appreciate that these reduced costs are reflected in the selling price
    dasanman69cnocbui
  • Reply 17 of 35
    slprescottslprescott Posts: 748member
    Good for two reasons:

    1. Apple supplier agreements (presumably) dictate QUALITY standards in addition to price points. So... it is not a "race to the bottom", it is a "race to the top" as measured by quality-per-dollar.

    2. Diversifying manufacturing/assembly partners helps in two ways: (1) reduces Apple risk from any single partner, and (2) creates the possibility of Apple shifting workload to other countries (India, Brasil) that are lobbying for in-country operations as a prerequisite for selling products in the country.

    A.k.a., capitalism is alive and well.

    bsimpsenmike1nolamacguycalilolliverai46fastasleep
  • Reply 18 of 35
    LoneStar88LoneStar88 Posts: 278member
    jurassic said:
    How dare a business run itself like a business, and try to optimize it's expenditures... (only if it is Apple
    And everyone else does the same. At some point cost cutting has to impact quality no?
    No. Apple will continue to hold the line on quality. 
    nolamacguycalilolliver
  • Reply 19 of 35
    bsimpsenbsimpsen Posts: 251member
    rogifan_new said:
    And everyone else does the same. At some point cost cutting has to impact quality no?
    Not if you have quality standards.

    It's quite possible (and almost unavoidable) for technology costs to go down while quality goes up. Thirty years ago, nothing as complex and powerful as an iPhone was nearly as reliable or affordable.

    The presumption here seems to be that Apple isn't learning, adapting or improving. I don't buy that presumption.
    nolamacguycalilolliverfastasleeppscooter63
  • Reply 20 of 35
    LoneStar88LoneStar88 Posts: 278member
    cropr said:
    jurassic said:
    How dare a business run itself like a business, and try to optimize it's expenditures... (only if it is Apple
    I don't mind that Apple tries to reduce the cost of the components it needs to build an iPhone.  But I would appreciate that these reduced costs are reflected in the selling price
    Enough price whining! Apple's pricing is fair as long as the company uses part of its profits to fund continuing R&D and expansion. 
    calilolliver
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