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

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

Posted: 14 Jan 2019, 05:44 , by Daniel Petrov

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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

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posted on 14 Jan 2019, 05:55 21

1. Gustavoar (Posts: 22; Member since: 13 Jan 2016)

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

posted on 14 Jan 2019, 07:02 3

6. emvxl (Posts: 137; Member since: 29 Sep 2009)

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

posted on 14 Jan 2019, 17:56 1

27. Finalflash (Posts: 4042; Member since: 23 Jul 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 14 Jan 2019, 06:19 10

2. cmdacos (Posts: 3591; Member since: 01 Nov 2016)

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

posted on 14 Jan 2019, 06:23 3

3. Whitedot (Posts: 582; Member since: 26 Sep 2017)

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

posted on 14 Jan 2019, 07:12 5

7. RebelwithoutaClue (Posts: 5419; Member since: 05 Apr 2013)

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 14 Jan 2019, 08:10 1

11. Whitedot (Posts: 582; Member since: 26 Sep 2017)

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

posted on 14 Jan 2019, 08:18 1

14. alligator (Posts: 60; Member since: 09 Jan 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 14 Jan 2019, 08:59 4

18. RebelwithoutaClue (Posts: 5419; Member since: 05 Apr 2013)

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

posted on 14 Jan 2019, 06:29 10

4. SIGPRO (Posts: 2783; Member since: 03 Oct 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 14 Jan 2019, 06:35 2

5. trnz007 (Posts: 45; Member since: 12 Feb 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 14 Jan 2019, 08:11 1

12. mrochester (Posts: 903; Member since: 17 Aug 2014)

Apple’s profit margin is 37-39%.

posted on 14 Jan 2019, 07:46 3

8. Vancetastic (Posts: 392; Member since: 17 May 2017)

Big company bullies smaller companies. How shocking.

posted on 14 Jan 2019, 08:05 1

9. worldpeace (Posts: 2944; Member since: 15 Apr 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 14 Jan 2019, 11:26

21. Vokilam (Posts: 884; Member since: 15 Mar 2018)

Where do you get your numbers? 200% markup?

posted on 14 Jan 2019, 12:13

24. jacky899 (Posts: 312; Member since: 16 May 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 manufacturing
https://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 manufacturing
https://www.vox.com/technology/2018/9/13/17851052/apple-iphone-price-china-trump-us-trade

posted on 14 Jan 2019, 16:16

26. Vokilam (Posts: 884; Member since: 15 Mar 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 15 Jan 2019, 04:59

29. Marcwand3l (Posts: 335; Member since: 08 May 2017)

LoL, now you are just deflecting.

posted on 16 Jan 2019, 03:02

31. Vokilam (Posts: 884; Member since: 15 Mar 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 14 Jan 2019, 08:06 2

10. KingSam (Posts: 1243; Member since: 13 Mar 2016)

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

posted on 14 Jan 2019, 15:39

25. master-mkk (Posts: 179; Member since: 27 Aug 2014)

they won't

posted on 15 Jan 2019, 01:55

28. Vokilam (Posts: 884; Member since: 15 Mar 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 14 Jan 2019, 08:11 2

13. WingMan (Posts: 241; Member since: 28 Mar 2008)

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

posted on 14 Jan 2019, 08:33

15. TBomb (Posts: 925; Member since: 28 Dec 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 14 Jan 2019, 08:37 1

16. mrochester (Posts: 903; Member since: 17 Aug 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 14 Jan 2019, 08:50 2

17. L0n3n1nja (Posts: 1481; Member since: 12 Jul 2016)

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

posted on 14 Jan 2019, 11:41

22. tntwit (Posts: 79; Member since: 11 Sep 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 14 Jan 2019, 10:27 2

19. michaelny2001 (Posts: 296; Member since: 01 Aug 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 14 Jan 2019, 10:46 2

20. ph00ny (Posts: 1882; Member since: 26 May 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