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Commentary:Taiwanmakersreluctantto
yieldtoApplerequeststolowerquotes

REPORTS

ANALYSIS

DATA

Chinasmartphonemarketandindustry2Q2016

CageChao,TaipeiSteveShen,DIGITIMES[Friday19August2016]

Globaltabletmarket1Q2016

ApplehasmetresistancefrommakersinTaiwan'ssupplychaintolowertheirquotesforpartsand
componentsforiPhone7devices,amovewhichaimstoforceAppletodiscontinueitsestablishedpolicy
ofconstantlysqueezingprofitsfromTaiwansuppliers.

ChinasmartphoneAPshipments1Q2016

Appleissaidtohaveaskeddownstreampartandcomponentsuppliers,excludingTaiwanSemiconductor
ManufacturingCompany(TSMC)andLarganPrecision,toreducetheirquotesforiPhone7devicesbyas
muchas20%eventhoughordervolumesfornewphonesarereportedly30%lowerthanthoseplaceda
yearearlier.
Majordownstreamsuppliers,notablyAdvancedSemiconductorEngineering(ASE)andassociated
companiesundertheFoxconnGroup,haverepliedApplethattheycouldnotbeabletoacceptorders
withoutreasonableprofitsatthistime.
AppleisleveragingtherisinghandsetsupplychaininChinatoforceTaiwanbasedcompaniestoreduce
theirquotescomparabletothoseofferedbyChinabasedsuppliers.Butitmakesnosenseforsucha
requirmentsincethequalityofproductsrolledoutbyTaiwanandChinabasedsuppliersisstandingat
differentlevels.
AppleappearedtohavechosentobypassTSMCandLargananddidnotrequirethetwocompaniesto
reducetheirquotessimplybecauseitisdifficultforAppletofindalternativesourcestoreplaceTSMCor
Largantoofferfoundryservicesorhighendcameramodules,respectively.
ASE,whichhasreachedamergeragreementwithfellowcompanySiliconwarePrecisionIndustries
(SPIL),hasseenitsbusinessgrowingsteadilyinrecentyearsoptimizingitsadvancedpackaging
technology.TheplannedmergerwithSPILwillhelpASEfurtherexpanditsclientbaseforsustainable
growth.
FoxconnhasacquiredJapanbasedSharprecently,andordersfromSharpwillenableproductionfacilities
underthegrouptohumathighgearforaperiodoftime,andthereisnoneedforthegiantEMSto
sacrificeitsmarginstoworkforApple.
Appleaccountedfora17.2%shareoftheglobalsmartphonemarketintermsofshipmentvolume,but
tookashighas91%oftheindustry'sprofitsin2015,accordingtodatacompiledbyCanaccordGenuity.It
isabouttimeforAppletoamenditspurchasingpolicy.

MOREREPORTS

SUPPLYCHAINWINDOW
RELEASES

WHITEPAPERS

Sponsorzone
BULLETIN

GMobiacquiresleadingperformancemobile
advertisingplatformMassiveImpact
TaiwanPavilionfeaturesinnovativesmartTaiwan
atMWCShanghai
Nextstageofvisionarymobiletechnology
development:VirtualrealityandIoT
NVIDIAPascaltakingusonestepclosertoaVR
world
IntroductionofLYNwavesmartantennasolution
MORERELEASES

ONDISPLAY
1

PolarM600
Photo:Company,Aug4.

Categories:ICmanufacturingICTmanufacturingIT+CEITcomponents,peripheralsMobile+telecomMobile
componentsMobiledevicesPC,CE
Tags:AppleASECommentaryFoxconnFoxconnElectronicshandsetcomponentSPILTaiwan
Companies:AdvancedSemiconductorEngineeringFoxconnElectronics(HonHaiPrecisionIndustry)Siliconware
PrecisionIndustriesLtd.

SamsungGalaxyNote7

RELATEDSTORIES

Photo:Company,Aug3.

Chinamarket:Xiaomi,Appleseesmartphoneshipmentsdeclinesharplyin2Q16,saysIDC(Aug18)
Taiwanmarket:FETofferspaymentservicesforAppStore,AppleMusic,iTunes(Aug16)
Smartphoneshipmentstogrow5%in2016whenApplepostsfirstannualdecline,saysCanalys(Aug16)
Appleaddsnewserversupplierstoreducecosts(Aug16)
TSMCgrabschipordersfornewAppleWatch,saysreport(Aug9)

AppleiPhoneSE
smartphone

TSMCsecuresexclusiveordersforAppleA11chip,saysreport(Jul18)

Photo:Company,Mar23.

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Samsung12megapixel
imagesensor
Photo:Company,Mar22.

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