Apple pushes suppliers to take a price cut to secure orders

By

Larry Kudlow
He's a shrewd operator is Tim Cook!
Photo: Apple

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