Apple reportedly squeezing 'iPhone 7' parts suppliers for better pricing

AppleInsider

New supply chain reports suggest that Apple is putting pressure on Taiwan-based part suppliers to lower prices for "iPhone 7" components, despite reportedly ordering lower quantities.

In an editorial published by supply chain monitor DigiTimes, Apple is said to be seeking price points for components similar to prices from China mainland-based parts suppliers. The companies are said to be resisting, citing a lack of sufficient profit if they meet Apple's demands.

Apple is said to be seeking as much as a 20 percent cut in pricing. Order volumes are claimed to be 30 percent lower from the Taiwan suppliers than previously placed for construction of the iPhone 6s family of devices last year.

The report also claims that Taiwan Semiconductor Manufacturing company (TSMC), and Largan Precision are excluded from the demands.

TSMC is said to be Apple's exclusive "A10" chip foundry for the "iPhone 7." Largan Precision has historically supplied camera modules for the iPhone.

Digitimes has a spotty track record of picking out Apple product specifics. However, the venue has a good handle on the overall supply chain, useful for sussing out trends and larger industry factors, like this alleged supply chain demand.

The "iPhone 7" in question is expected to debut in an event in early September. Besides just excising the analog headphone jack, differences between the new model and the iPhone 6 family include camera improvements, enhanced fast charging capability, and a base 32GB of device storage.

schlack

hoping apple releases iPhones in a rainbow of colors this time around...gotta do something to get people to upgrade to a device that largely looks the same as their existing device. /notsarcasm

gatorguy

sog35 said:

So iPhone7 sales will be down 30%

got it

I notice you aren't complaining about Apple perhaps "squeezing suppliers" to the point they see little profit if they comply just so that Apple themselves can become even richer. You displayed a different attitude yesterday about Uber squeezing their suppliers (the drivers) so that Uber could increase their margins. Yesterday you called it greed. What is it today?  (not that I agreed with your views yesterday to begin with)

Templeton

Next one will be THE ONE.

AI_lias

sog35 said:

I still don't get why Apple did not do some kind of design change for iPhone7.

I'm sorry but moving the antenna lines is not enough.

People say design don't matter. But it does. People don't want to buy a phone that looks EXACTLY like a 3 year old phone (iPhone6)

I myself am disappointed that they did not change the design to make it less slippery. I mean, it's practically unusable without a case. Who cares about the antenna lines (which were horrible to begin with [if anyone other than Apple would have used those antenna lines you would not hear the end of it on this forum]) if you need to put it in a case anyway. Slippery as a fish. Put some sharp edges back on it, like a slab phone had. Unfortunately, I'm afraid even next year's glass phone will be just as slippery, and have glass on both sides.

mike1

Shouldn't every business squeeze every supplier, every time?
TSMC and Largan are probably excluded because they've already reached agreements and signed deals.

Apple has long worked to diversify their supplier base. This would result in few orders for legacy suppliers and is not necessarily indicative of fewer phones being sold.

dougd

There's no end to Apple greed

cnocbui

mike1 said:

Shouldn't every business squeeze every supplier, every time?
TSMC and Largan are probably excluded because they've already reached agreements and signed deals.

Apple has long worked to diversify their supplier base. This would result in few orders for legacy suppliers and is not necessarily indicative of fewer phones being sold.

What if that squeezing results in the suppliers cutting things like worker safety and pay?  Is that OK?  Do you think Apple needs to squeeze the little guys because they are hard up and their margins are wafer thin?

mike1

cnocbui said:

mike1 said:

Shouldn't every business squeeze every supplier, every time?
TSMC and Largan are probably excluded because they've already reached agreements and signed deals.

Apple has long worked to diversify their supplier base. This would result in few orders for legacy suppliers and is not necessarily indicative of fewer phones being sold.

What if that squeezing results in the suppliers cutting things like worker safety and pay?  Is that OK?  Do you think Apple needs to squeeze the little guys because they are hard up and their margins are wafer thin?

Every business looks out for its own best interest. If you don't like the terms, you either try to negotiate better ones or you decline the business. That's how EVERY company in the world deals with suppliers, especially for commodities. It's called competition. Neither Apple nor anybody else should overpay for any component.

cnocbui

sog35 said:

I still don't get why Apple did not do some kind of design change for iPhone7.

I'm sorry but moving the antenna lines is not enough.

People say design don't matter. But it does. People don't want to buy a phone that looks EXACTLY like a 3 year old phone (iPhone6)

I think they are working on not just a new design but a completely new way to make phones, probably making the whole thing - hopefully sparing the battery, though it wouldn't surprise me in the least if not - a unified single slab as if everything were embedded in a single block of epoxy resin.  Nothing will move, not even buttons.

It couldn't be this year because the new design hinges strongly on  flexible Amoled displays and since Samsung is having to build more factories just to make them, an earlier time frame than next year just wasn't possible.

ericthehalfbee

gatorguy said:

sog35 said:

So iPhone7 sales will be down 30%

got it

I notice you aren't complaining about Apple perhaps "squeezing suppliers" to the point they see little profit if they comply just so that Apple themselves can become even richer. You displayed a different attitude yesterday about Uber squeezing their suppliers (the drivers) so that Uber could increase their margins. Yesterday you called it greed. What is it today?  (not that I agreed with your views yesterday to begin with)

Why should someone complain about something Apple is doing that EVERY SINGLE MANUFACTURER in the world does? That is, always negotiate for the lowest possible prices on components.

gatorguy

ericthehalfbee said:

gatorguy said:

sog35 said:

So iPhone7 sales will be down 30%

got it

I notice you aren't complaining about Apple perhaps "squeezing suppliers" to the point they see little profit if they comply just so that Apple themselves can become even richer. You displayed a different attitude yesterday about Uber squeezing their suppliers (the drivers) so that Uber could increase their margins. Yesterday you called it greed. What is it today?  (not that I agreed with your views yesterday to begin with)

Why should someone complain about something Apple is doing that EVERY SINGLE MANUFACTURER in the world does? That is, always negotiate for the lowest possible prices on components.

Read the Uber thread from yesterday. You and I are asking Sog the same question

gatorguy

sog35 said:

gatorguy said:

sog35 said:

So iPhone7 sales will be down 30%

got it

I notice you aren't complaining about Apple perhaps "squeezing suppliers" to the point they see little profit if they comply just so that Apple themselves can become even richer. You displayed a different attitude yesterday about Uber squeezing their suppliers (the drivers) so that Uber could increase their margins. Yesterday you called it greed. What is it today?  (not that I agreed with your views yesterday to begin with)

there is a difference between Apple squeezing one of its suppliers for cheaper prices than a company replacing its ENTIRE WORKFORCE with machines.

If the only way for that supplier to meet Apple's demands and get/retain their business is to aggressively control costs by firing their human workers and replacing them with robotics would you then have a problem with it? Do you think Apple would care if machines replaced those humans? Do you think they should care? 

gatorguy

sog35 said:

gatorguy said:

sog35 said:

there is a difference between Apple squeezing one of its suppliers for cheaper prices than a company replacing its ENTIRE WORKFORCE with machines.

If the only way for that supplier to meet Apple's demands and get/retain their business is to aggressively control costs by firing their human workers and replacing them with robotics would you then have a problem with it? Do you think Apple would care? Would you think they should care? 

That's a whole bunch of what if's.  Also Apple is not squeezing their EMPLOYEES. Its their vendor. Apple is not responsible to make sure their vendors can pay their employees. 

Uber is taking obvious and deliberate steps of firing their ENTIRE WORKFORCE. 

If you can't see the difference in these situations, I can't help you.

When did Uber fire their entire workforce? When did Uber even say they were soon going to do so. Oh, that's right. they didn't so now you're just making stuff up. Perhaps you should just realize you've lost this particular argument and move on to your next "OMG Apple, OMG Tim Cook"" complaint. 

As for those "if's" they're already underway. Did you forget so soon Foxconn's efforts to replace workers with robots so as to maintain some profitability in the face of demands for lower prices by component and build customers?

MacBAir

sog35 said:

AI_lias said:

I myself am disappointed that they did not change the design to make it less slippery. I mean, it's practically unusable without a case. Who cares about the antenna lines (which were horrible to begin with [if anyone other than Apple would have used those antenna lines you would not hear the end of it on this forum]) if you need to put it in a case anyway. Slippery as a fish. Put some sharp edges back on it, like a slab phone had. Unfortunately, I'm afraid even next year's glass phone will be just as slippery, and have glass on both sides.

any kind of redesign would have been nice. Even if it was worse than the 6 design at least it would look different and people would be able to tell that its a new iPhone.

Now if you buy an iPhone7, people won't even be able to tell it isn't a 3 year old phone. And yes, stupid and vain things like that matter.

The only explanation is that next's years phone will be a massive change. And Apple does not want to use a new shell for only one year (iPhone7). So they use the same shell for 3 years and then come out with a new shell next year.  IMO, that is a massive risk in the short term, but they should recover with iPhone8.

But this is the same type of slow action that Apple showed when they did bring out a bigger iPhone along with the iPhone5s.  That allowed Samsung to get a massive foothold in the market. Looks like Apple is making the same mistake again with not updating the design for THREE YEARS. UGH.

While I'm certain that it might matter for a minority, that's not the issue at hand.

The issue at hand is keep trying to squeeze as much money per device as they can, at all costs. Technology be damned. Growth be damned. Being years behind on screen and camera tech be damned. Being years behind on useful features like waterproofing and fast charging be damned.

Samsung seems to have no problem into selling a product with much higher base storage, superior screen on every metric, great design, great battery life and fast charging, waterproofing, superior camera on every metric... And still profit like madman from it.

Only Apple. Only Apple needs to keep artificially destroying the experience (8 out of 10 iPhone users with 16 GB...) in order to squeeze as much as they can.
And here they are, trying to squeeze even more from the suppliers instead of using that amount of money to provide a superior product.

What will happen is that their greed will put them at the mercy of suppliers, instead of their success putting suppliers at their mercy. Yearly profits dropping like a stone should be enough... should.

gatorguy

sog35 said:

gatorguy said:

sog35 said:

That's a whole bunch of what if's.  Also Apple is not squeezing their EMPLOYEES. Its their vendor. Apple is not responsible to make sure their vendors can pay their employees. 

Uber is taking obvious and deliberate steps of firing their ENTIRE WORKFORCE. 

If you can't see the difference in these situations, I can't help you.

When did Uber fire their entire workforce? When did Uber even say they were soon going to do so. Oh, that's right. they didn't so now you're just making stuff up. Perhaps you should just realize you've lost this particular argument and move on to your next "OMG Apple, OMGTtim Cook"" complaint. 

As for those "if's" they're already underway. Did you forget so soon Foxconn's efforts to replace workers with robots so as to maintain some profitability in the face of demands for lower prices by component and build customers?

Apple has never stated they will replace their entire workforce with robots.
Foxconn's employee isn't Apple employees. Bringing them up is irrelevant.

So then I'll ask you again:
A. If the only way for that supplier to meet Apple's demands and get/retain their business is to aggressively control costs by firing their human workers and replacing them with robotics do YOU then have a problem with it? (yes it is happening)
B. Do you think Apple would care if machines replaced those humans?
C. Do you think Apple should care? 
...and a new one
D. Do you think Uber's suppliers, the drivers (they aren't Uber's employees), should acquiesce and accept lower profits to try and avoid being replaced by machinery? 

phone-ui-guy

gatorguy said:

sog35 said:

So iPhone7 sales will be down 30%

got it

I notice you aren't complaining about Apple perhaps "squeezing suppliers" to the point they see little profit if they comply just so that Apple themselves can become even richer. You displayed a different attitude yesterday about Uber squeezing their suppliers (the drivers) so that Uber could increase their margins. Yesterday you called it greed. What is it today?  (not that I agreed with your views yesterday to begin with)

The report doesn't conclude that Apple is cutting builds by 30%. It says that suppliers are being asked to cut prices and take 30% cuts in volume. Sounds more like Apple is bringing in more suppliers for components so that individual suppliers are getting 30% less volume than the 6S. The SoC and camera module supplier make sense to not be included if they are providing tech that cannot be matched by other vendors. Apple would lock them in on pricing and total volume and then put pressure on the components that do not meet that criteria. If you have three sources for something, start squeezing...

adrayven

mike1 said:

Shouldn't every business squeeze every supplier, every time?
TSMC and Largan are probably excluded because they've already reached agreements and signed deals.

Apple has long worked to diversify their supplier base. This would result in few orders for legacy suppliers and is not necessarily indicative of fewer phones being sold.

Yup.. thats called this mythical term "Doing business".. it's an alien concept to the average normal that one should want to push for better pricing.. right? I mean.. why NOT just pay whatever a supplier demands.. Not like this is really news.. seriously.. This is normal for ALL businesses.. They ALL look to lower costs.. Why is this even news? Other than it's a slow news day and AI needed to comment on a company doing horrible thing like 'breathing'... or 'existing'.. just shocking a tell you.

SpamSandwich

Why in the world is anyone even arguing over this story?

DigiTimes! Hello?!?

Zarkin

sog35 said:

gatorguy said:

If the only way for that supplier to meet Apple's demands and get/retain their business is to aggressively control costs by firing their human workers and replacing them with robotics would you then have a problem with it? Do you think Apple would care? Would you think they should care? 

That's a whole bunch of what if's.  Also Apple is not squeezing their EMPLOYEES. Its their vendor. Apple is not responsible to make sure their vendors can pay their employees. 

Uber is taking obvious and deliberate steps of firing their ENTIRE WORKFORCE. 

If you can't see the difference in these situations, I can't help you.

Uber is not squeezing their EMPLOYEES.  Its their vendor.

Uber drivers are not employees of Uber.  They are independent contractors.

So there pretty much isn't a difference between the situations.

Apple *should* squeeze its vendors to get the lowest prices.  In this case their vendors are at a point where they can tell Apple "No"    To switch vendors costs a lot of money in retooling, and the 'new' vendors are unlikely to undertake that unless there are adequate profits to be made

MacBAir

sog35 said:

MacBAir said:

While I'm certain that it might matter for a minority, that's not the issue at hand.

The issue at hand is keep trying to squeeze as much money per device as they can, at all costs. Technology be damned. Growth be damned. Being years behind on screen and camera tech be damned. Being years behind on useful features like waterproofing and fast charging be damned.

Samsung seems to have no problem into selling a product with much higher base storage, superior screen on every metric, great design, great battery life and fast charging, waterproofing, superior camera on every metric... And still profit like madman from it.

Only Apple. Only Apple needs to keep artificially destroying the experience (8 out of 10 iPhone users with 16 GB...) in order to squeeze as much as they can.
And here they are, trying to squeeze even more from the suppliers instead of using that amount of money to provide a superior product.

What will happen is that their greed will put them at the mercy of suppliers, instead of their success putting suppliers at their mercy. Yearly profits dropping like a stone should be enough... should.

Samsung mobile operating profits last quarter - $3.8 billion
Apple operating profits last quarter - $10.1 billion

Samsung mobile operating profits 2015 - $9.3 billion
Apple operating profits 2015 - $71.2 billion

Hell last quarter Apple's operating profit in 90 days was more than Samsung Mobiles ENTIRE OPERATING PROFIT FOR 2015!!!  Even though it is historically Apple's weakest quarter each year. 



Apple is still the King

So, let me get this straight...

You are dismissing the fact that Apple's problems are that they sell inferior products, their sales on every hardware product are slumping YoY, their net profits are slumping YoY, because Apple makes more money than Samsung Mobile for now?

Yeah, but Samsung Mobile is growing fast. Samsung Electronics is also growing fast and 2 or 3 quarters away to surpass Apple in net profit. And everything is being done with offering superior products without artificial limitations that destroy the experience. We are this close to say that Samsung Electronics is more profitable then Apple. If nothing changes and Apple keeps skimping on the user experience, Samsung will offer better products, sell more, make more money... And Apple's market share will keep going down, together with their products.

And then, what? What will happen when devs see iOS as a afterthought because sales keep dropping YoY, as they are? What are they to do when Apple artificially destroys the experience of 9 out of 10 users and ignores 90% of the market that can't justify an iPhone because a cheaper Android is more than good enough for most tasks? Or do you also think that Android is crap? (that would say a lot)

I'm not even convinced that sales are dropping mainly because devices are lasting longer. Every Mac (me included) and iOS user I know is frustrated. The vast majority just spent 750 € on a friggin smartphone with 16 GB of storage. It's full after one week! What experience is that? It's their fault that they didn't want to spend 850€ on a device that provides a decent, minimally modern experience? Are they to blame because they thought that they wouldn't have to deal with crap like that on a 750 € device?

Do you really think that the majority of people buying 32 GB and Less iOS devices (8 out of 10? 9 out of 10?) will buy an iPhone, next? No. It's not what is happening. Samsung Mobile's exponencial growth with the s7 and now note7 shows that people are fed up with that crap.

We are all fed up with pathetic low storage, RAM, TN panels, 5400 rpm hard drives, not updating macs in years, dropping all decent and pro software... FED UP.

At this point, I hope that all of Apple's talented engineers, that are being suffocated because of the bean counters, go somewhere else, like they have been doing lately.