Apple Demanding Cost Cuts From Suppliers After 30% Plunge In Orders: Digitimes

Tyler Durden's picture

Apple stock is sliding very modestly for now as Digitimes reports Tim Cook has asked downstream part and component suppliers in Taiwan to reduce quotes for iPhone 7 devices by as much as 20%...even though order volumes for new phones are reportedly 30% lower than those placed a year earlier.

Via Digitimes.com,

Apple has met resistance from makers in Taiwan's supply chain to lower their quotes for parts and components for iPhone 7 devices, a move which aims to force Apple to discontinue its established policy of constantly squeezing profits from Taiwan suppliers.

 

Apple is said to have asked downstream part and component suppliers, excluding Taiwan Semiconductor Manufacturing Company (TSMC) and Largan Precision, to reduce their quotes for iPhone 7 devices by as much as 20% even though order volumes for new phones are reportedly 30% lower than those placed a year earlier.

 

Major downstream suppliers, notably Advanced Semiconductor Engineering (ASE) and associated companies under the Foxconn Group, have replied Apple that they could not be able to accept orders without reasonable profits at this time.

 

Apple is leveraging the rising handset supply chain in China to force Taiwan-based companies to reduce their quotes comparable to those offered by China-based suppliers. But it makes no sense for such a requirment since the quality of products rolled out by Taiwan- and China-based suppliers is standing at different levels.

For now, it appears none of this matters...


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SHEEPFUKKER's picture

Back to flip phones we go. You know, because retro is so cool now. 

Ghost of PartysOver's picture

Hey, I still use my flip phone.  Had 2 smart phones and they were crap. 

PTR's picture

 

Flip phones don't get hacked.

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) PTR Aug 19, 2016 12:43 PM

Because the suppliers will make it up in VOLUME??

Countrybunkererd's picture

I think a 40-50 percent drop in QUALITY.  That will help sales even more.  Gotta love corporate america, destroy all things good then blame the consumer for not wanting it.  Sounds like a term we all know and hate.

this isn't for phones, it is in general regarding the race to the bottom:

<Buy cheap crap every year or two

<Buy a durable product every 10-15 years

tarsubil's picture

I know a guy who is six figures in debt and his job is very close to the chopping block. He has a nice iPhone. I'm not betting against Apple because Apple relies on people being retarded.

JuliaS's picture

"There's a consumer born every minute." Think that's how the saying goes.

de3de8's picture

Or, as my good friend who owns a new car dealership says, " there's an ass for every seat" .

sun tzu's picture

What makes you think he will or can keep upgrading every 2 years?

tarsubil's picture

As I said, he's retarded. He'll find a way.

gaoptimize's picture

Apple contributed heavilly to the politicians who are destroying the economy.  So when their sales for luxury electronics go to crap, it is poetic justice.

sun tzu's picture

There's this thing called android, which is over 65% of the market

froze25's picture

IOS and the IPHone are dying. Their popularity is failing, its no longer the "cool" thing to own. They will keep shrinking and go back to the tiny niche they started with.

Syrin's picture

Apple sucks.   I don't get their fan boys.   Our Mac sucks, this iPhone I have stinks, and iTunes is the most user unfriendly thing ever created.

LadiesLoveCoolJames's picture

I love my iPhone. But this is troubling. I enjoy Apple because the quality is always unimpeachable and the shit just works. Had Windows and had Android. Both good, but Apple works better for
Me. But I certainly don't want to hear about them forcing cost reductions like Walmart. That will just lead to shitty quality and terrible products.

Nick Jihad's picture

I would not worry. Apple's chief problem is that their old products are too good. My 4S from 2010 continues to work flawlessly. I'll bet that there is plenty of fat that Apple can cut from their own staff, if their suppliers won't make concessions.

Abbie Normal's picture

Someone far more prescient than me said it during the iphone peak a couple of years ago:

Their market share will eventually fall to the same level as the Mac OS; because an overpriced and closed system cannot compete against an open and less expensive one.

DavidC's picture

Dear Tim,
Fuck off. Love, Taiwan.

I don't swear as a rule but I find myself wanting to do so more and more at these fuckwits (oops, sorry, there's another one).

DavidC

dilligaff's picture

I know what you fucking mean!  These fuckers doing this fucking shit all the fucking time drive me fucking crazy!

Countrybunkererd's picture

I am with you.  I don't know where it comes from and i don't like it but it is there anyway.

Christianman's picture

Lol. Reminds me of a movie called Demolition Man

"Stop, put your hands above your head...OR ELSE?!"

Kirk2NCC1701's picture

Execs need their bonuses, and the Supply Chain guys need their jobs and air miles.

Mat Cauthon's picture

Yea they do... because Apple doesn't give dividends to shareholders.

Both Applebot consumers and owners of their overinflated stock are the zombies they rely upon to funnel billions to themselves. 

HenryKissingerChurchill's picture

yes, it sucks when dirt cheap labor do not FEEL like dirt cheap labor anymore.

http://www.zerohedge.com/news/2016-08-15/mexico-labor-shortage

ZeroPoint's picture

Right. The suppliers should cut their margin because you are losing yours. Fuck off Apple.

blue51's picture

Is it copy Walmart hour ?

Countrybunkererd's picture

cheap shit abounds.  Durable products are non existent because people gravitate to the cheapest.  If you want to survive as a business you make cheap shit.

They ALL are going to do it because, for example spending 300 dollars on a kitchen faucet when they can get one for 85 bucks loses 99.45393664829949825829 percent of the time.

robertocarlos's picture

I was going to wait for the iPhone 7 but not if it's a Chinese POS.

Edit: No disrespect to China, you get what you pay for.

Abbie Normal's picture

When was it not a Chinese POS?  Oh yeah, the prototypes that were actually assembled in California.

DeeZ_nutZ's picture

cook should reach to the homo community.  i undertand there are so many of them and shit that if everyone would buy an overpriced piece of shit fone it would save the company.  after all, can't let a homo down, right?  otherwise it will be raciz and homofobic.

Infield_Fly's picture
Infield_Fly (not verified) Aug 19, 2016 10:07 AM

AAPL = fucked

 

Still long Warren???? LMFAO!!!!

ANestIOS's picture

Apples I like eating

E.F. Mutton's picture

Go shit in hat, roundeye Yankee Sausage Jockey

 

DrBrown's picture

Apple is just another one trick pony.

Atomizer's picture

U wok won cent day. We mak fhones. Wapple is cuksumer. 

fiboman's picture

Market (SPX) is dangerously approaching stall speed

http://goldenopportunitytrading.blogspot.co.uk/

 

DrBrown's picture

Rucky Gord wirr herp you out.

Publicus's picture

Apple will soon learn that the Chinese are the boss.

Panic Mode's picture

Still using iPhone 4 - Bite me.

scsherman's picture
scsherman (not verified) Aug 19, 2016 10:19 AM

The Apple Cult is dying out. They are a hardware company in a world dominated by software and data. Their main competitor is Google which uses smartphones as a loss leader, while Apple is completely reliant upon them. Google is diversified and constantly evolving while Apple is still trying to be a brand of products. Apple products are great for people that don't understand technology and enjoy paying high prices for inferior products.

Utopia Planitia's picture

I have had the priviledge over the last 25 years to use equipment from a large number of manufacturers.  Nobody makes a perfect "thing" - that is neither possible nor desirable (unless you want to spend ~$1M+ for a smartphone, tablet. etc...).  However, the Apple equipment is markedly superior to all other manufacturers in quality, longevity, and usability.  Yes, it is more expensive.  And sometimes Apple does really stupid things.  However, you need to ask yourself:  Do I want something that is 99.99+% going to work, or something that forces me to waste hours and hours getting it to work?

That is worth something to me.  It may not be the latest or the coolest.  But it always works.

I know technology inside and out.  I have done both hardware design and software design.  I have also been stuck wasting thousands of hours trying to get some MS piece of crap to work. I choose the Apple approach.  My life is valuable, I do not wish to waste it going through endless contortions to get something simple to work. It has nothing whatsoever to do with people not understanding technology.  All the Apple people I know understand the tech, end-to-end, 10X better than probably 99% of the people on ZeroHedge.

There is no perfect laptop, smart phone, tablet, etc.  The question you have to ask is how much pain do you want to go through to actually ACCOMPLISH something.  If your objective is ACCOMPLISHMENT then choose Apple.  If you are cost constrained or do not value your time then choose another vendor.

Simple, eh?

Countrybunkererd's picture

Speaking of time and value of it, NOT having a smart phone has saved me thousands of hours.  Not believing i need something and thinking about it and realizing the vampire of time it actually is kept me from them.  My flipperphone is all i need.  THANK GOD!

I am still pissed that my phone that fit in the coin pocket of my jeans died.  Maybe it kept me from a certain cancer though.

Abbie Normal's picture

Simple like transferring a file between devices using itunes?

Nick Jihad's picture

"Google is diversified and constantly evolving".

There are other ways that you could describe Google. Google is also buying market share in the phone/tablet space, with profits from their advertising business. But there is a mighty stench emanating from that business, because everyone knows that a massive portion of those ad profits derive from click fraud.

And Google's practice of sinking profits into losing side-ventures, instead of distributing them to shareholders, is going to become unpopular with those shareholders, just as for Microsoft and Intel.

Anopheles's picture

Yet how long have those same investors supported Tesla?  (and Amazon)  Tesla is all based on the faint hope of future profits.  Not looking good at the moment.

FoodStampPrez's picture

Dear Supplier,

We need you to lower your prices by 30% so we can borrow another $150 billion to buy back on our own stock. Also, we only have $185 billion in cash in the bank, which is very low by our standards.

I know this may force your employees to live in cardboard boxes, but that's their problem, not ours.

I'm sure you understand.

Sincerely,

Tim Fucking Cook

Anopheles's picture

Except the majority of that cash is held separately, outside the US and can't be brought back into the US without significant taxes and penalties.

FoodStampPrez's picture

Dear Supplier,

We need you to lower your prices by 30% so we can borrow another $150 billion to buy back on our own stock. Also, we only have $185 billion in cash in the bank, which is very low by our standards.

I know this may force your employees to live in cardboard boxes, but that's their problem, not ours.

I'm sure you understand.

Sincerely,

Tim Fucking Cook