Two new reports suggest that Apple is both tightening up on certain aspects of its spending in China, while also boosting its overall investment — as it pushes hard to grow its brand in the country at a time when local demand for its iPhones has “plummeted.”
One report suggests that Apple is looking to reduce the cost of running its China servers by switching suppliers: a move which comes as it also allegedly driving a hard bargain from suppliers of its various iOS and Mac devices — demonstrating some belt-tightening during a period in which business is slowing down.
“In the past, Apple’s biggest concern was mainly improvements in technologies and yield rates on the supply side, but the company is now focusing more on reducing costs,” the report states.
As part of the server shakeup, Apple has reportedly dropped its existing partner Quanta Computer in favor of server system integrator ZT, a partner of Taiwan-based Inventec, while also adding China-based Inspur to its server supply chain. If true, Apple’s not the only company to adopt Inventec’s data center servers. This part of Inventec’s business has grown by 20 percent in the first half of 2016 — as a result of orders from Chinese companies including Baidu, Alibaba and Tencent.
While Apple reportedly uses HP servers in the United States and elsewhere, the company was ordered to switch over to Chinese servers in China back in 2014, after a backlash prompted by the state-controlled media over national security concerns.
The other report, courtesy of Reuters, meanwhile claims that Apple CEO Tim Cook has told Vice Premier Zhang Gaoli, one of China’s most senior officials, that the company’s new R&D center in China will be built by the end of this year. According to Cook, who is currently in China, Apple will continue to increase its emphasis on investment in the country.
iPhone sales in China fell by a third in the company’s most recent quarterly earnings — after more than doubling one year earlier. Apple has also clashed with the Chinese government over other issues, such as the forceable shutting down of the iBooks Store and iTunes Movies.
Despite this, Cook has been outspoken about his belief that China is Apple’s future biggest market, while the company has aggressively been opening a large number of new Apple Stores in the region.
