It's being reported today that with the worldwide smartphone shipment growth slowing down, Apple has been cutting its existing upstream component suppliers' quotes and seeking new component suppliers to maintain its high gross margins. Several Taiwan-based IT players such as Largan Precision, Foxconn Electronics (Hon Hai Precision Industry) and Pegatron Technology have already been affected, according to sources from the upstream supply chain.
Currently, Largan is facing strong competition from Japan-based Kantatsu over camera module orders, while Foxconn and Pegatron are seeing Apple adding new ODM partners such as Wistron for the production of its new iPhone.
Taiwan's printed circuit board (PCB) players are also competing aggressively over Apple's orders by cutting prices, and so far only FPCB players Zhen Ding Tech and Flexium Interconnect are enjoying stable profits.
To minimize the impact, Taiwan's IT players have been aggressively seeking to expand their orders from other clients and are improving their technologies, yield rates and product quality to widen their gaps with competitors.
The report lastly notes that Apple's demand for price cuts is currently affecting Japan-based component suppliers the most since their quotes are usually higher. Although China-based component suppliers have advantages in pricing, the instability of their finance, product quality and yield rate still allows Taiwan-based suppliers to have some advantages in the competition.
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