In a feature piece based largely on background sources, The Wall Street Journal on Thursday profiled Tony Blevins, Apple’s vice president of procurement, giving a unique insight into the dog-eat-dog business of buying components from third-party suppliers for Apple products.
The Journal reported many instances where Blevins — known as “The Blevinator” — stopped at nothing to get the lowest prices for products. He also intimidated and manipulated many manufacturers to get an advantage, according to the report and its sources.
Blevins and his ‘shrewd’ negotiating tactics
Case in point … Blevins attempted to persuade subcontractors not to pay a chipmaker that Apple was in litigation with, “depriving” Qualcomm — the company behind iPhone’s modem chips — “of $8 billion, according to court documents and people who recall the case,” reporter Tripp Mickle wrote.
The piece focused much on Blevins’ “shrewd” negotiating skills. In one instance, he negotiated to buy mobile phone modem chips from Intel at “roughly 50% less than Samsung paid” for similar chips from Qualcomm. Partly as a result, Apple has been able to grow its profit margins today on iPhones to around 25%, according to company earnings reports.
Calling Blevins’ relationship with suppliers often “badgering,” an unnamed former colleague described his negotiating style “like killing sheep versus shearing them.”
Apple plays tough on price
When STMicroelectronics in 2013 refused to lower prices for gyroscope sensors — parts that help the iPhone screen adjust to movement — Blevins threatened to go elsewhere, according to a former STMicroelectronics executive.
“The supplier held its ground,” the Journal reported, “only to watch the business shift to a rival. That killed an estimated $150 million in the supplier’s annual revenue … amounting to a fifth of its sensor sales.”
Sources told the Journal that Apple accused liquid crystal display-maker Japan Display of breaching a nondisclosure agreement in 2017 and demanded it pay a $5 million penalty. The company refused to pay, but Blevins forced Japan Display to agree to prior approval by Apple of all public announcements moving forward. An unnamed Japan Display executive described Apple’s nondisclosure agreements as “torturous,” saying he had never heard of others demanding so much.
Blevins was reported by a former Apple employee to have gone so far as to change out staff in his buying department “to keep them from developing supplier relationships that might dilute their focus on saving Apple money.”
Blevins refused a request to speak on the record to The Wall Street Journal, saying, “I’m a loyal company guy.”
In December 2018, Blevins was given the distinguished alumni award from his alma mater, North Carolina State University. In his acceptance speech, Blevins reminisced about his college years in the 1980s and how, at the time, NC State was a merit-based institution based on academic success.
“It taught me off the bat … it wasn’t a matter of what you could do, what you should do … it’s ‘sit down and show us what you can do,'” Blevins said.