The iPhone 6 Impacts Apple’s Supplier Relationships

The latest model of the world’s premier smartphone, the iPhone 6, will come at a lower cost to consumers at $199. Analysts expect iPhone addicts aren’t the only ones who will benefit from the pricing transition; it’s expected to act as a subsidy for the Asian supply chain, as well.

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“Taiwanese companies assembling the new iPhone may include Hon Hai, Pegatron, and Wistron. Hon Hai, also known as Foxconn, is likely to be the biggest beneficiary, with 65 percent of the orders for the smaller phone and nearly all the orders for the larger one, according to Yuanta Financial. Pegatron is likely to receive 20 percent of iPhone orders next year, analysts Sherman Shang and Calvin Huang of SinoPac Securities wrote in a report issued on [Sept. 10],” According to Bloomberg BusinessWeek.

It’s expected that the sales will lead to not only a boon for suppliers, but the Asian economy at large. Specifically, trade between Taiwanese suppliers and China is expected to grow; however, the island’s exports overall are expected to increase too.

In particular, Reuters notes: “Exports to China, Taiwan’s largest export destination, rose 8.7 percent in August from a year earlier, picking up speed from July’s 6.5 percent pace. For the month, Taiwan’s imports also rose a strong 14.1 percent from a year earlier, resulting in a trade surplus of $4.11 billion in August, finance ministry data showed. Government agencies have said the new Apple smartphone will help bolster Taiwan’s economic expansion this year.”

Taiwan suppliers are responsible for most of the gadgetry found within past iPhones, as well as the iPhone 6. Processors, semiconductors, sapphire screens, and more are all part of materials that make up Apple’s Taiwanese supply chain.

Although most of these suppliers receive almost 40 percent of their revenue share from Apple, the iPhone 6 won’t keep them safe. The tech giant is notorious for edging out even long-term suppliers in favor of up-and-coming, inexpensive solutions. [/show_to]