DigiTimes reports Taiwanese suppliers are resisting requests from Apple to lower pricing even further. The site writes Apple asked downstream part and component suppliers to cut their quotes for iPhone 7 components by as much as 20 percent, even though orders are down 30 percent versus those placed a year ago.
Major downstream suppliers reportedly told Apple they could not accept orders without reasonable profits at this time, and are trying to force Apple to discontinue its policy of constantly squeezing its suppliers. Apple is reportedly threatening to switch to China-based suppliers, but the Taiwanese firms claim there's a big difference in quality:
Apple is leveraging the rising handset supply chain in China to force Taiwan-based companies to reduce their quotes comparable to those offered by China-based suppliers. But it makes no sense for such a requirment since the quality of products rolled out by Taiwan- and China-based suppliers is standing at different levels.
Apple appeared to have chosen to by-pass TSMC and Largan and did not require the two companies to reduce their quotes simply because it is difficult for Apple to find alternative sources to replace TSMC or Largan to offer foundry services or high-end camera modules, respectively.