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Apple's Taiwan suppliers reluctant to lower prices of components in light of declining iPhone sales

By Milen Y.

Published: Aug 19, 2016, 7:14 AM

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Apple's Taiwan suppliers reluctant to lower prices of components in light of declining iPhone sales

According to a report by Taiwanese publication DigiTimes, Apple has been trying to persuade Taiwan-based companies up its supply chain to lower their quotes for components for the upcoming iPhone 7 and iPhone 7 Plus, in a bid to accomplish its goals of what the report refers to as “constantly squeezing profits from Taiwan suppliers.”

Reportedly, Apple has been trying to persuade some of its suppliers, excluding TSMC – the world's largest independent semiconductor foundry – and major camera modules supplier Largan Precision – to cut their prices for components for the iPhone 7 by as much as 20%, despite a reported 30% decline in order volumes for new phones this year and lower-than-expected iPhone sales in Q3 2016 (compared to Q3 2015).

According to the report, Apple is trying to leverage its demands by finding alternatives to current Taiwan-based suppliers in the face of Chinese component makers with lower quotes for parts, which “makes no sense […], since the quality of products rolled out by Taiwan- and China-based suppliers is standing at different levels.”

Reportedly, Apple is sticking with juggernauts TSMC and Largan Precision, only because the company is unable to find appropriate China-based alternatives.