Apple using lower parts quotes, new suppliers to keep up high profit margins - report
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.
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.
Comments
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.
Now, if only they'd pass that on to their reseller network rather than regularly increasing costs and restricting some product lines.
This is just good business practices.
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.
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.
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.