Apple’s new Retina MacBook Air looks to be one of the more gorgeous laptops in Apple history. However, suppliers reportedly aren’t expecting to be awash with profits thanks to Apple’s orders.
That’s partly because of the price of the laptop, but also because of a bit of belt-tightening on Apple’s part which will reduce how much it has to pay manufacturers.
Specifically, this refers to Apple supposedly “[retrieving] materials procurement rights” from suppliers. As we noted back in the summer, starting with Apple’s new MacBook models, Apple is carrying out direct pricing negotiations for smaller parts like screws and other tiny components.
These were previously purchased directly by its contracted supply partners, who could presumably add a markup as part of it. Apple only screened the name lists of third-party suppliers, and then inspected their quality. The move could cost suppliers 10-15 percent of their profits.
Higher prices, lower demand
Suppliers are also concerned about what the higher price of Apple’s new MacBook Air will mean for orders. Added to this is the fact that MacBook Air shipments have been gradually falling.
From a high over 20 million units in 2015, they fell under 19 million units in 2017. In the first half of 2018, this number supposedly reached 7.8 million units — which could indicate another annual decline unless the Retina MacBook Air is a gigantic smash hit.
“As Apple has decided to retrieve materials procurement rights from supply chain partners since mid-2018, the partners have seen their profit margins drop significantly as they can only earn contract production fees. Nevertheless, partners still have to rely on massive orders from Apple to bolster their capacity utilization rates.
Through product updates and price hikes for new MacBook Air model, Apple seeks to sustain its revenue and profit growths, the sources commented, adding that if shipments of the new device fail to ramp up significantly, supply chains will not pin much hope on orders from Apple to support their revenue and profit performance.”
While Digitimes is not always reliable with its predictions, it generally proves more so when it comes to supply chain sources.
Are you planning to get the new MacBook Air? Let us know in the comments below.
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.
