According to a new report by DigiTimes, Apple’s relationship with its original manufacturers has changed in a significant way as manufacturing partners are no longer responsible for component procurement and production. The changes come as Apple has reportedly been able to obtain better supply of components from its own sources, allowing the company to cut out an unnecessary intermediary party and increase its profits.
The publication claims that the changes are expected to affect profitability of Taiwan manufacturers in the long term, as they generate some profit from procuring components for Apple. On the other hand, Apple is also said to have appeased its partner by letting them raise quotes to maintain their gross margins. As a result, Apple is reportedly expected to increase OEM partners’ profits in the near-term by between 3% and 5%. In addition, OEMS will not be required to maintain standing component inventories going forward, which DigiTimes claims will also reduce pressure on those partners.
Apple CEO, Tim Cook, is regarded as an operational genius who has done an exceptional job in managing his company’s supply chain partners. This success has allowed Apple to announce and ship new products in a matter of days, getting its hotly anticipated devices in the hands of consumers as quickly as possible. As for what Apple’s alleged changings in component procurement actually mean for the company going forward, Cook cautioned that attempts to read into pieces of data regarding the supply chain are foolish endeavors. The CEO mentioned earlier this year that it’s “impossible” to interpret a specific data point as to what it means for Apple’s overall business. He specifically said the following regarding the matter:
The supply chain is very complex, and we obviously have multiple sources for things. Yields might vary, supplier performance might vary.