Apple diversifies to keep Apple Watch suppliers on their toes

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Theater Mode finally makes its way to Apple Watch in watchOS 3.2 beta 1.
Apple Watch has a new supplier.
Photo: Ste Smith/Cult of Mac

Scoring Apple orders is a great thing if you’re a manufacturer, but don’t expect an easy ride!

The latest example of this is Quanta Computer, which up until now has been the chief supplier of the Apple Watch. However, according to a new report, Apple has decided to hand over 20-30 percent of Apple Watch orders as a way to”decrease Quanta’s price bargaining power.”

As per the report, Compal Electronics (the second largest-largest notebook manufacturer in the world) will produce between one-fifth and 30 percent of Apple Watch and Apple Watch Series 2 devices from now on. These will be produced at its factory factory in Kunshan, eastern China. Previously Quanta manufactured 100 percent of Apple Watch devices.

This move is a long time in the making. Back in 2015, we wrote that Apple was keeping its options open when it comes to selecting manufacturing partners for the iPhone 6 and Apple Watch by inviting Compal and Wistron to join its supply chain. More recently, the rumor gained momentum again, although there were no details about the ratio of orders between Compal and Quanta.

While Apple hasn’t yet revealed how many Apple Watches it’s sold, the decision to pull the lever on placing Apple Watch orders with Compal is also allegedly related to an “optimistic sales outlook” for Apple Watches on Apple’s part. During Apple’s last earnings call, Tim Cook noted that the holiday season was, “our best quarter ever for Apple Watch. Both units and revenues with holiday demand so strong that we couldn’t make enough.”

Whether this means we’re any closer to Apple revealing Apple Watch sales figures remains to be seen. Still, from a supplier point of view, this is exactly why Foxconn bosses previously said that it’s dangerous for manufacturers to rely too much on Apple.

After all, it didn’t get where it is by not having a cutthroat attitude toward price competitiveness.

Source: Digitimes