Apple

As iPhone sales drop, Apple reportedly asks suppliers to cut their component prices

by Daniel Petrov / Jan 14, 2019, 5:44 AM

As iPhone sales drop, Apple reportedly asks suppliers to cut their component prices

As if we needed more confirmation that iPhone sales aren't doing as well as analysts expected, an index of 19 Apple suppliers tracked by Nikkei, is showing a revenue slump for the first time since 2016.

The Taiwanese company Catcher that makes the metal frames for the iPhone X, had a disastrous 28% decrease in December revenue and the iPhone camera lens maker Largan Precision managed to beat it with 33.86% drop in sales then.

The revenue of Apple's chief assembler - Foxconn - fell 8.27% in December from the same period last year, too, which the company attributes to "the relatively large scale decline in the consumer electronics segment."

Apple attributes the slower-than-expected iPhone sales to the US trade war with China and other external factors and has reportedly asked suppliers to cut their prices 10% which would mean a pretty terrible quarter for them as the price drop would come on top of diminished sale projections.

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31 Comments

1. Gustavoar

Posts: 22; Member since: Jan 13, 2016

Apple always abusing its power over suppliers. No news here.

posted on Jan 14, 2019, 5:55 AM 21

6. emvxl

Posts: 140; Member since: Sep 29, 2009

I was going to say. "Our bottom line first before yours".

posted on Jan 14, 2019, 7:02 AM 3

27. Finalflash

Posts: 4063; Member since: Jul 23, 2013

This might have a very disastrous effect. As Apple pushes for lower and even thinner margins for its suppliers, they'll start folding and end up being bought out by competitors, which will then proceed to charge Apple an arm and a leg for the same stuff. It is literally a straight up dumpster fire over at Cupertino apparently. A very rich dumpster fire, but a dumpster fire nonetheless.

posted on Jan 14, 2019, 5:56 PM 1

2. cmdacos

Posts: 4104; Member since: Nov 01, 2016

And this company holds higher moral ground than QC? Don't think so...

posted on Jan 14, 2019, 6:19 AM 10

3. Whitedot

Posts: 771; Member since: Sep 26, 2017

Apple, do 10% off for your products my business had a bad month?

posted on Jan 14, 2019, 6:23 AM 3

7. RebelwithoutaClue unregistered

You can always ask, just like Apple is asking. And suppliers can say no, with the risk Apple will go to the competition of course. And if Apple says no to you, you can go to the competition as well. Pretty basic supply and demand.

posted on Jan 14, 2019, 7:12 AM 5

11. Whitedot

Posts: 771; Member since: Sep 26, 2017

You can always look for a free ride . World is full of them.

posted on Jan 14, 2019, 8:10 AM 1

14. alligator

Posts: 94; Member since: Jan 09, 2016

But if Apple is your largest client (sometimes the only one) then you cannot say No because you are in risk to lose the whole business. So it's better to say Yes but keep the business. Just my thoughts.

posted on Jan 14, 2019, 8:18 AM 1

18. RebelwithoutaClue unregistered

True, but if you rely on only one (big) customer, whose fault is that?

posted on Jan 14, 2019, 8:59 AM 4

4. SIGPRO

Posts: 2815; Member since: Oct 03, 2012

Fruit company you a are truly a crappy company! Ask your suppliers to cut prices while a fruit phone cost around 200 euro's to make and you charge 1000 plus euro's? Where is the honesty in that? I hope the suppliers will say F you we will increase instead!

posted on Jan 14, 2019, 6:29 AM 10

5. trnz007

Posts: 48; Member since: Feb 12, 2014

I was about to write that very same comment.... Let Apple buy components at cheap price and we consumers buy their phones at more than justifiable price... I hope the suppliers says F U to them...

posted on Jan 14, 2019, 6:35 AM 2

12. mrochester

Posts: 978; Member since: Aug 17, 2014

Apple’s profit margin is 37-39%.

posted on Jan 14, 2019, 8:11 AM 1

8. Vancetastic

Posts: 1103; Member since: May 17, 2017

Big company bullies smaller companies. How shocking.

posted on Jan 14, 2019, 7:46 AM 3

9. worldpeace

Posts: 3127; Member since: Apr 15, 2016

Lol, they already bought those parts dirt cheap from chinese suppliers, and sell their phones with 200% mark-up, now they ask for 10% price cut from their supplier, that's pathetic.

posted on Jan 14, 2019, 8:05 AM 1

21. Vokilam

Posts: 1181; Member since: Mar 15, 2018

Where do you get your numbers? 200% markup?

posted on Jan 14, 2019, 11:26 AM 0

24. jacky899

Posts: 430; Member since: May 16, 2017

The 200% markup is incorrect. It's more than that. According to ZDNet, 32GB iPhone 7 that retails for $649 costs Apple: $219.80 in component cost $5 for China sweatshop manufacturinghttps://www.zdnet.com/article/heres-how-much-the-iphone-7-costs-to-make/ According to Vox.com For Iphone X that retails for $1,000 $370.25 in component cost $8 for China sweatshop manufacturinghttps://www.vox.com/technology/2018/9/13/17851052/apple-iphone-price-china-trump-us-trade

posted on Jan 14, 2019, 12:13 PM 0

26. Vokilam

Posts: 1181; Member since: Mar 15, 2018

Do you have this for Samsung flagships and etc? I just want a real comparison. And where are other devices manufactured (are those not “sweatshops” in comparison)?

posted on Jan 14, 2019, 4:16 PM 0

29. Marcwand3l

Posts: 426; Member since: May 08, 2017

LoL, now you are just deflecting.

posted on Jan 15, 2019, 4:59 AM 0

31. Vokilam

Posts: 1181; Member since: Mar 15, 2018

and now you're deflecting too come on? both companies are extremely similar in who they use for labor and their markup.

posted on Jan 16, 2019, 3:02 AM 0

10. KingSam

Posts: 1425; Member since: Mar 13, 2016

I have a feeling this years iPhones will be great. This is the wake-up call apple needed.

posted on Jan 14, 2019, 8:06 AM 2

25. master-mkk

Posts: 214; Member since: Aug 27, 2014

they won't

posted on Jan 14, 2019, 3:39 PM 0

28. Vokilam

Posts: 1181; Member since: Mar 15, 2018

i was waiting for this a long time, i can appreciate samsung, apple, and others for thier pro's... but i think apple can do much much better, unfortunatly they're stuck with that bean counting tim cook - and i hope finally he gets his head turned the right direction.

posted on Jan 15, 2019, 1:55 AM 0

13. WingMan

Posts: 263; Member since: Mar 28, 2008

So basically Apple says "Drop your prices, so we won't have to" or i'm missing something

posted on Jan 14, 2019, 8:11 AM 2

15. TBomb

Posts: 1394; Member since: Dec 28, 2012

if their supplier prices went down 10%... the prices we get charged may go down 1 to 5% at most probably. But will a $1000 iphone be $900 (10% off?) dont count on it.

posted on Jan 14, 2019, 8:33 AM 0

16. mrochester

Posts: 978; Member since: Aug 17, 2014

Well as Apple are a for profit company I should imagine they do want their suppliers to drop their prices so that they can generate more profit.

posted on Jan 14, 2019, 8:37 AM 1

17. L0n3n1nja

Posts: 1549; Member since: Jul 12, 2016

When I buy less of something I usually don't expect a discount.

posted on Jan 14, 2019, 8:50 AM 2

22. tntwit

Posts: 82; Member since: Sep 11, 2012

When everyone is buying less of something (i.e. iPhones), the laws of supply and demand say the price should be lower, not higher (i.e, iPhone X compared to iPhone 7). Less demand doesn't somehow make your product more valuable just because you are trying to maintain profits. Great if you can, but it doesn't seem to be working that way as they are reportedly starting to drop prices on the Xr.

posted on Jan 14, 2019, 11:41 AM 0

19. michaelny2001

Posts: 326; Member since: Aug 01, 2012

emmm, no. quite the contrary. the more you buy, the cheaper it gets. the less you buy the more expensive. actually suppliers should increase their prices.

posted on Jan 14, 2019, 10:27 AM 2

20. ph00ny

Posts: 2026; Member since: May 26, 2011

That's why they get agreed pricing from their suppliers based on the assumption that they will be buying x amount but the actual amount of parts bought from supplier is significantly less than x. This has been an ongoing complaint from various suppliers over the years