iPhone Part Suppliers Say Apple Told Them To Accept Price Cuts

Image courtesy of Studio d'Xavier

For almost every part in the iPhone, Apple has another supplier lined up and ready to go. That’s a good practice in case anything goes wrong, and also to give the company negotiating power when it wants to cut costs. Apple is putting that backup plan into action now, as suppliers say that the company is out to lower its cost on parts as smartphone sales have slowed down.

Suppliers told the Wall Street Journal that Apple has told them to expect two things as the next-generation iPhone comes out: that Apple expects to sell fewer phones and order fewer components from its suppliers, and that it also expects to pay its suppliers less for the components that it does buy.

There are some parts that only come from one supplier, though. The Journal’s sources noted that the chips and camera lenses that will be used in the next-generation iPhones only have one supplier, leaving the company in a weaker position to bargain with those companies.

Globally, where the market for smartphones is growing, people aren’t interested in pricey iPhones. Consumers in China are opting for less expensive and more patriotic Android phones from local electronics companies. The “less expensive” part is key, though: the current price of an entry-level unlocked iPhone is actually lower in China than in the U.S. right now.

Apple Squeezes Parts Suppliers to Protect Margins [Wall Street Journal]

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