Apple has been known for driving a hard bargain when it comes to its component suppliers. However, Digitimes reports that Taiwanese suppliers are starting to resist Apple’s demands.
Apple is said to have asked downstream part and component suppliers […] 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.
Both sides have strong arguments and it doesn’t look like either one is backing down.
Apple is reportedly citing massive supply-chains in China as a reason for Taiwanese suppliers to reduce cost. But, on the other hand, companies in Taiwan are citing higher quality products as a reason to resists. In fact, Apple agreed to the terms of two Taiwanese suppliers because of this.
Apple appeared to have chosen to by-pass TSMC and Largan and did not require the two companies to reduce their quotes simply because it is difficult for Apple to find alternative sources to replace TSMC or Largan to offer foundry services or high-end camera modules, respectively.
It appears Apple’s largest supplier, Foxconn, is also pushing back on pricing as the company had just acquired display maker Sharp, making Apple’s business less valuable.