Apple is accused of reducing iPhone 7 parts orders and lowering prices in the supply chain

August 24th marks the fifth anniversary of the day when Apple CEO Tim Cook took over from Apple founder Steve Jobs.

At this point, the iPhone 7, which is seen by the outside world as the device that will reverse Apple's downward trend, will be released in half a month, and news that Apple has drastically cut prices with its Taiwanese supply chain has spread like wildfire.

In the five years that Cook has been in charge of Apple, Apple has continuously refreshed its performance myth. But it is also in these five years that Apple, which was once and still is a target for every domestic mobile phone manufacturer, is gradually falling from the altar.

Single finger compression

The news that Apple is suppressing prices in Taiwan's supply chain has made the upcoming iPhone 7 a focus of attention.

On August 22, Taiwanese media quoted Taiwanese supply chain sources as saying that Apple asked Taiwanese suppliers to lower their quotes by about 20% when purchasing parts for the new iPhone 7. Apple's price cuts were resisted by major suppliers. ASE and several affiliated companies of Foxconn said they would not accept Apple orders if there was no reasonable profit.

It is worth noting that not all OEMs have been subjected to price pressure from Apple.

The above-mentioned source said that TSMC , which exclusively manufactures the A10 chip for iPhone 7 , and Largan Precision, which provides the camera module for iPhone 7, have not received any price cut requests from Apple. Some people pointed out that the reason why Apple did not lower the price of these two companies is that chips and camera modules play an important role in Apple's supply chain.

This is not the first time that Apple has been reported to have pressed prices on its supply chain. In May this year, there was news that Apple had pressed prices on its supply chain by up to 30%. The outside world believes that Apple hopes to get more profits from the supply chain, and the low quotes from mainland suppliers give Apple room to press prices on other suppliers.

Sun Yanbiao, director of the First Mobile Phone Industry Research Institute, analyzed to reporters that the fact that iPhone 7 lowered prices by 20% from Taiwanese suppliers on the eve of its release shows that most of the components and materials used in iPhone 7 did not bring about revolutionary changes, but only slightly adjusted the shape.

"If Apple replaces new components, it will definitely not lower prices to suppliers. Because at the beginning when the yield rate is not high, Apple will definitely cultivate the supply chain," he told reporters.

However, Sun Yanbiao also told reporters that Apple's price cuts may not be as large as 20%. He said that the downward price curve law of the mobile phone industry chain shows that if the same specifications of parts are purchased repeatedly, the price will probably drop by about 5% each year.

Although Apple's price cuts on Taiwanese suppliers have triggered boycotts, some people point out that this will not have a significant impact on the iPhone 7's scheduled release in September this year.

According to the reporter, Apple usually designates several suppliers for one link. Taking lenses as an example, Taiwan's Primax Technology and South Korea's LG Innotek are both suppliers of Apple's dual-lens modules. Taiwanese media also reported that Apple's iPhone 7 parts orders to Taiwan's supply chain were 30% lower than the same period last year.

Cutting profits from the supply chain?

Apple is raising its knife in the hope of getting more profits from the supply chain. But behind the scenes, Apple's decline seems to be unstoppable.

On July 27, Apple released its third quarter financial report for fiscal year 2016, showing that its revenue and net profit both declined again. Among them, Apple's third quarter revenue was 42.358 billion US dollars, a decrease of 14% over the same period last year. Net profit was 7.796 billion US dollars, a decrease of 27% over the same period last year's 10.7 billion US dollars.

Among Apple's many product lines, the iPhone, which accounts for two-thirds of Apple's revenue, still saw the largest decline. In the previous second quarter financial report, iPhone sales fell for the first time since its launch.

The financial report shows that iPhone sales in the current period totaled 40.399 million units, a year-on-year decline of 15%, while revenue of $24.048 billion fell by 23% year-on-year.

Among many regional markets, Greater China, Apple's largest overseas market, still saw the largest decline in revenue.

The financial report shows that the revenue of Greater China in the current period was US$8.848 billion, a year-on-year decline of 33% from US$13.230 billion in the same period last year. This figure is also significantly larger than the 26% decline in the revenue of Greater China in the previous Q2 financial report.

But Cook said in a subsequent conference call that the low-end iPhone SE launched by Apple in April this year was "very successful", bringing millions of first-time iPhone buyers in developed and emerging countries.

However, Wang Yang, research director of IHS Technology China, previously revealed to reporters that according to his understanding, the iPhone SE orders placed with the supply chain last year were only about 14 million units, which is less than 10% of Apple's annual shipments of more than 200 million mobile phones. He also said that SE sales are not good for emerging markets such as China and India.

The iPhone 7, which will be released in September this year, carries the outside world's expectations for Apple's innovative breakthroughs. However, Apple's confidence index for the iPhone 7 does not seem to be high. According to IHS statistics, the number of iPhone 7 orders this year is about 15% lower than that of iPhone 6S.

Sun Yanbiao told reporters that this number was an order placed by Apple based on the sales of iPhone 6S last year. Both iPhone 6S and SE cannot reach the sales peak that iPhone 6 once achieved.

Apple's fall from grace

It is obviously unfair to interpret Apple's five-year journey under Cook's leadership only by decline.

Cook, who has a background in finance, has led Apple to become the world's largest company by market value in five years. Even in the third quarter of 2016, when both revenue and profit fell again, Apple still had $231.5 billion in cash flow.

Cook also has a special fondness for the Chinese market. In August this year, Cook visited China for the ninth time before the release of iPhone 7. Many applications familiar to Chinese users also make the iOS 10 system that Apple will officially launch in September this year more like a "customized version for China."

But during the five years that Cook has been in charge of Apple, Apple, which was known for its disruptive innovation, has shown signs of decline and has become increasingly mediocre. The iPhone, which supports two-thirds of Apple's revenue, has been accused of lacking innovation and only "making minor repairs." The iWatch, the only new hardware product launched after Jobs' death, has also performed below market expectations. How to break through itself has become Apple's biggest problem.

Sun Yanbiao told reporters that the CPU of iPhone 6S is 20% faster than that of iPhone 6, but consumers do not notice it. The market performance brought about by the excess performance of mobile phones is that the software and hardware technology of mobile phones have reached the ceiling, and it is not easy to make further breakthroughs.

After launching the iPhone SE to occupy the mid-to-low-end market, Apple, which was once the envy of domestic mobile phone manufacturers, has gradually fallen from its pedestal.

Looking back at the path of Apple's rise, the biggest difference between it and MOTO and Nokia is that Apple relied on a single star product to change the rules of the game in the industry chain. Although the launch of iPhone SE has increased Apple's sales, Apple, which has been leading the pack with innovative subversion, has become a nobody.

According to IDC's data on China's smartphone market in the second quarter of 2016, Apple shipped only 8.6 million units in the Chinese market, accounting for only 7.8% of the market share, a 31.7% drop from the same period last year, ranking fifth. Huawei, OPPO, vivo and Xiaomi ranked in the top four, with a total market share of 56.1%.

Once they have reached the top, the former giants have never escaped their fate of decline. Will Apple repeat the mistakes of Nokia ?

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.