Apple Demanding Price Cuts From Suppliers Ahead of iPhone 7

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Apple is demanding price cuts on components for the new iPhone from its overseas suppliers to maintain its high profit margins, despite a global slowdown in smartphone sales, according to Taiwanese website DigiTimes.

The report claims several large Taiwan-based component suppliers such as Foxconn, Largan Precision, and Pegatron have already been affected, while strong competition in Greater China forcing the companies to "compete aggressively" over Apple's orders by cutting prices.
Currently, Largan is facing strong competition from Japan-based Kantatsu over camera module orders, while Foxconn and Pegatron are seeing Apple adding new ODM partners such as Wistron for the production of its new iPhone.
Apple is expected to announce the iPhone 7 series in September. The smartphones are expected to retain iPhone 6s-like designs with faster Apple A10 processors, dustproofing and waterproofing, repositioned antenna bands, and faster LTE and Wi-Fi. A dual-lens camera and 3GB of RAM may be exclusive to the 5.5-inch model.

Other rumored features include a Smart Connector, stereo speakers, and a flush, touch-sensitive home button, but it is not entirely clear if each of those features are destined for the iPhone 7 or iPhone 7 Plus/Pro, no longer planned, or reserved for the alleged OLED-based iPhone with glass casing expected in 2017.

Article Link: Apple Demanding Price Cuts From Suppliers Ahead of iPhone 7
 

smacrumon

macrumors 68030
Jan 15, 2016
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This can only lead to poorer wages, poorer working conditions and poorer outcomes for all factory workers assembling Apple products. This is completely wrong -- great wages, working conditions and outcomes is what's needed. Disgraceful, Apple.

Has Apple's corporate social responsibilities been completely discarded? People, planet, and profit can exist together if the balance is correct, but this isn't balanced.

On a side note, Apple, how about cut your retail pricing of iPhone, iPad, Mac, etc and absorb the cost of doing so via the incredible profit margins made on each item sold.

#ReasonsNotToUpgrade
 
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solarguy17

macrumors 6502a
Sep 10, 2007
722
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More then likely with the cost of the phones seeming to increase from carriers using uncustomer friendly policies, like killing subsidized phones, Apple wants to lower Tuesday cost of the phone to seem more competitive. With a bunch of cheap Andriod phones coming out that are new it hard for Apple to justify $650 or $750 dollars for a phone. Especially when the iPad's are cheaper, yet bigger.
 

BrodieApple

macrumors 6502
Aug 16, 2015
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I can see a $100 price drop honestly. Apple knows this ones going to be hard to sell. Unless these rumours aren't even real and they're super secret this year. They'll definitely have more tricks to show though
 
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dmylrea

macrumors 68040
Sep 27, 2005
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More then likely with the cost of the phones seeming to increase from carriers using uncustomer friendly policies, like killing subsidized phones, Apple wants to lower Tuesday cost of the phone to seem more competitive. With a bunch of cheap Andriod phones coming out that are new it hard for Apple to justify $650 or $750 dollars for a phone. Especially when the iPad's are cheaper, yet bigger.
I don't think I can EVER remember a time when it seemed that Apple felt they had to be competitive, pricewise, for anything they've sold. But then, in the past, consumers felt the high prices were warranted just to have the privilege of owning the status symbol. Nowadays, not so much.

My question is, don't these suppliers already have contractual prices for their parts? It doesn't surprise me that Apple wants it's suppliers to make less money so Apple can keep their ridiculously high profit margins. Wonder what the suppliers profit margins are already?
 

Porco

macrumors 68040
Mar 28, 2005
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Presumably many components should be getting cheaper every year, whereas other, particularly newer components should cost the same or perhaps more if significantly improved on what they replace. It's likely a constant balancing act. Without us knowing exactly which components Apple is demanding price cuts for it's difficult to even begin to judge whether the demands are reasonable or not, surely?

I would not want Apple to make working conditions or pay worse for anyone who helps make their iPhones for them, but they also have to compete for the best prices possible, otherwise the phone will be worse than it would have been, or prices will rise, or both, and less scrupulous rivals will capitalise, gaining greater market share, which in the end would harm more low-paid workers overall anyway.
 

smacrumon

macrumors 68030
Jan 15, 2016
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hopefully this means the price will drop for customers. as much as i love apple i'm starting to think they have too much money
The the first line of the article reads: "Apple is demanding price cuts on components for the new iPhone from its overseas suppliers to maintain its high profit margins, despite a global slowdown in smartphone sales, according to Taiwanese website Digitises."

Unfortunately this seems to have little to do with customer outcomes or the workers making the products.
 

Robert.Walter

macrumors 68000
Jul 10, 2012
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The discussion of developing multiple suppliers for a commodity like a camera module, OLED device or assembly is something every responsible large scale company does to guard against gouging or supply interruption due to an unforeseen negative change at the supplier.

The best way to keep a supplier on its toes and honest, is to not put all of your eggs in any one suppler's basket.

Furthermore, it is standard practice in many industries to negotiate "productivity" cost downs over the life of a contract. Each year a supplier commits to become more efficient and continuously reduce the costs in their purchasing and manufacturing operations. The pass a part of this on to their customer by shaving 1 or 2 percent from their prices. (Oddly, OEM's rarely pass these savings on to their customers.)

Ultimately this squeezes out the inefficient suppliers in favor of the better run suppliers. Over 20 years, I watched our lessor 1-st tier competitors quit the business as my employer and our peers grew in size. Despite the consolidation in our sector, we never saw a loss of pay or benefits, rather we saw increases. (We also did this without drastic offshoring.)
 
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dampfnudel

macrumors 68040
Aug 14, 2010
3,204
1,427
Brooklyn, NY
This can only lead to poorer wages, poorer working conditions and poorer outcomes for all factory workers assembling Apple products. Disgraceful, Apple.

Have corporate social responsibilities been completely discarded? People, planet, and profit can coexist if the balance is correct, but this isn't balanced.

Apple, how about cut your retail pricing of iPhone, iPad, Macs, etc and absorb the cost of doing so via the incredible profit margins made on each item sold.
Sounds great in theory, but cutting prices is a theory Apple seems reluctant to put into practice. They usually wait until they're forced at gun point by the market to do so and even then they sometimes wait until that bullet has been fired.
 

macfacts

macrumors 68040
Oct 7, 2012
3,824
4,546
Cybertron
I can see a $100 price drop honestly. Apple knows this ones going to be hard to sell. Unless these rumours aren't even real and they're super secret this year. They'll definitely have more tricks to show though
Price drop for customers? Keep dreaming.

I can imagine Tim saying g to his suppliers, "I am altering the deal, pray I don t alter it further"
 

Benjamin Frost

Suspended
May 9, 2015
2,405
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London, England
The rich get richer!
And the poor get poorer.

Tim Cook, thy name is hypocrite. If you really cared about leaving the world a better place, you would take a salary of $1 like Steve Jobs did, and negotiate a fair wage for your suppliers rather than demanding that suppliers with profit margins far lower than yours are squeezed for every dime.
 

jmgregory1

macrumors 68000
Hmm, so this makes headlines that Apple is running their business using standard business practices? Asking / demanding lower prices for any / every product is normal and expected. I would be more concerned about Apple if the news was they were out demanding to pay higher prices for components. That would signal that they've gone off their rocker, but likely would result in an increase in valuation for Apple shares...because Wall Street clearly likes it more when companies purposely lose money.
 
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