A customer shows his Apple Inc. iPhone SE after purchasing it at the company's Omotesando store on March 31, 2016 in Tokyo, Japan. (Photo : Getty Images/Tomohiro Ohsumi/Getty Images)
In view of the slowing shipment growth of iPhones, Apple is demanding price cuts on components from its existing upstream suppliers. At the same time, the Cupertino tech giant is seeking new suppliers with a view to maintain is profit margins.
The price cut enforced by Apple has already affected several Taiwan-based suppliers of the company, including Foxconn Electronics, Pegatron and Largan Precision, DigiTimes reported. Sources told the publication that currently Largan is facing stiff competition from the Japanese firm Kantatsu over camera module orders from Apple.
On the other hand, Foxconn and Pegatron are also concerned as Apple is adding new ODM partners for its new iPhone production. Apple has already placed large orders with Taiwan-based Wistron, a former manufacturing arm of Acer.
What has increased the worries of Apple's existing upstream suppliers is that, currently, Taiwan's printed circuit board (PCB) players are also aggressively competing over orders from the Cupertino tech titan by slashing their prices. As of now, only FPCB players like Zhen Ding Tech and Flexium Interconnect are enjoying stable profits, the report said.
Meanwhile, IT firms in Taiwan have been aggressively looking to expand their orders from other clients with a view to minimize the impact of Apple's rate cuts. These Taiwanese players are improving their technologies, production rates as well as the quality of their products with a view to increase their gaps with competitors.
Even Japan-based component suppliers have been affected by Apple's demand for price cuts. In fact, they are most affected as their quotes are normally higher compared to the ODM manufacturers based in Taiwan and China.
While iPhone component suppliers from China still enjoy some advantages in pricing, they are losing to Taiwan-based suppliers on some other fronts. The Chinese suppliers are suffering from the insecurity of their finance, product quality as well as product rate. As a result, Taiwan-based component suppliers still seem to have some advantages in the competition.
Meanwhile, it is expected that Apple will announce the new iPhone 7 series in September. The new devices from the Cupertino tech firm are likely to retain design iPhone 6s, but incorporate faster Apple A10 processors, Mac Rumors reported. In addition, devices in the iPhone 7 series will be dustproof and waterproof, come with repositioned antenna bands and faster LTE and Wi-Fi.
Watch what you can expect from iPhone 7 below:
