Apple Watch competition hots up with second supplier

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Apple Watch
It will deliver a big boost to one Apple supplier.
Photo: Ste Smith/Cult of Mac

Apple has reportedly added a second Apple Watch supplier to its manufacturing chain.

Until now, Quanta Computer has been the only assembler of Apple’s wearable, but Compal Electronics is expected to begin shipping Apple Watch Series 1 and Series 2 units in the second half of 2017.

It’s still unclear exactly how successful Apple Watch is, because Apple refuses to tell us how many units it is selling. But based on figures from third-party sources, it’s by far the most successful smartwatch to date.

The latest data from research firm Canalys indicates that of the 9 million smartwatches sold during the fourth quarter of last year, 6 million were Apple Watches. Sales were up 12 percent over the same period in 2015.

There’s nothing to suggest Quanta has been unable to keep up with demand, but Apple is said to be adding a second supplier anyway. The move was likely designed to force competition and bring down manufacturing costs, thereby increasing profit margins.

Apple used Compal to do the same thing in April 2015. The company was added to its supply chain, alongside Wistron, to help manufacture Apple Watch and iPhone 6 units and bring down production costs.

Citing sources in the upstream supply chain, Digitimes claims that Compal has been moving production equipment from Eastern China to Chongqing since the second half of last year. Apple Watch production will help make up losses from decreased notebook orders.

“The upcoming next-generation Apple Watch, which is scheduled to be released in the second half, will continue to be manufactured by the Taiwan-based ODM; however, production of the existing second-generation Apple Watch will be partially given to Compal.”

Compal adapts as PC sales fall

Compal remains the second-largest notebook manufacturer worldwide, but it has been expanding into other areas in recent years to make up for falling PC sales. It shipped 5 million wearable and smart devices in 2016, and that figure is expected to double in 2017.

There are still no whispers about what we can expect from Apple Watch Series 3, which is likely to make its debut around September as the Series 1 and Series 2 models celebrate their first birthday.