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Apple leans on its suppliers

by on05 July 2016


Cut your prices to keep our ridiculous margins

Those suppliers who thought they were onto a good thing scoring a contract with Apple might be starting to regret it.

Jobs Mob has told its suppliers that they are going to have to cut their prices to prop up Apple’s profit margins.

According to Digitimes  Apple has decided that rather than doing something radical, like invent a new product, or make its existing models more original, it is better to lean on suppliers.

Apple has been cutting its existing upstream component suppliers' quotes and seeking new component suppliers to maintain its high gross margins. Largan Precision, Foxconn and Pegatron Technology have already been affected.

Sadly, none of them have the power to tell Apple to "go forth and multiply" because they have grown too dependent on the fruity cargo cult. Losing Apple as a customer would send their stock prices plummeting.

Apple has been playing off the manufactures against each other and adding new ODM partners such as Wistron and Intel to put the fear of Jobs into any of its suppliers who might be thinking that Apple is not worth propping up.

In many ways the fierce competition in the Far East is acting in Apple’s favour. But there are signs that in Taiwan at least some of the suppliers have had enough of Apple’s bullying ways. Digitimes reports that some have decided that it is better to expand their orders from other clients and are improving their technologies, yield rates and product quality to widen their gaps with competitors.

Most of Apple’s elbows are being jabbed into the kidney's of Japanese-based component suppliers the most since their quotes are usually higher.However they have the advantage of the Chinese in that they are better quality.

Last modified on 05 July 2016
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