Unsurprisingly for a company with the kind of success Apple has experienced, it is quite adept at driving a hard bargain.
According to a new report, Apple has been trying to maintain its high gross margin at a time of slowing smartphone demand by asking its suppliers to work for less money. Major suppliers Largan Precision, Foxconn and Pegatron Technology have all been affected.
This is the result of a shift in Apple’s strategy over the past few years, in which the company expanded the number of companies it does business with to mitigate against manufacturing problems and to gain leverage in terms of its orders. This latter point is achieved by Apple working with a range of rival businesses willing to undercut one another to tie themselves to the Apple juggernaut.
Foxconn has previously warned other manufacturers about the dangers of becoming too reliant on Apple without diversifying.
Apple’s demand for price cuts is reportedly affecting its Japan-based component suppliers the most, since they usually quote more than other companies that manufacture in markets where labor is cheaper.
Source: Digitimes
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
5 responses to “Apple pushes suppliers to take a price cut to secure orders”
Kind of reminds us of Walmart a.k.a Wally World “We Sell Cheap Plastic Junk” who in the past has wilded the price down from it’s suppliers forcing some into bankruptcy.
Its just sad that companies do this. Shame on you Apple.
Instead of cutting the profits of the fat cats, take it from the little guys.
You clearly have no idea who “the little guys” are. Hint: they’re not little, and they still make a substantial profit thanks to Apple.
i just don’t get apple. they go out there all eco friendly, lgbt gaga, etc while they are walmarting suppliers in order to retain “gross” or increasing profit margins. yet, the consumer gets shitte.
Yes, completely crazy that a for profit company wants to maximize their profits while also being socially conscious. Crazy, I say.
Also, buy some Apple shares and their profits will no longer offend you.