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Apple supply chain spreads wealth beyond Foxconn

A recent Asia-based research report on Apple sheds more light on the Cupertino-based consumer tech giant. Primarily, how Apple’s supply chain contributes in sales (%) to various vendor- and supplier-type companies serving Apple.

It is easy to understand the rising status (and relative rise in expectations) from top management in enterprises regarding the importance of effective set up and management of supply chains.

And, even though Foxconn is the more frequently mentioned supply chain partner usually associated with Apple in news stories, there are other players in Apple’s supply chain that also benefit while contributing to Apple’s success. (See Figure 1)

As most VentureOutsource.com readers already know, companies compete supply chain v. supply chain. And, while Samsung has recently overtaken Apple as the top smartphone maker (Q3), no one can deny Apple’s finely tuned supply chain is a competitive advantage when compared to many other consumer electronics organizations. (Apply to supply chain and operations job openings at Apple and other tech companies)

Supply chain complexity and risk both dramatically increase as globalization and multiple vendors, combined with supply lines that stretch across the globe, come into play for any tech company. (See: Interview with department chair with #1-ranked supply chain management school (Smeal – Penn State) on what makes a competitive supply chain)

The Asian report, by Fubon Research, singles out iPhone supply chain contributing vendors and suppliers such as iPhone components lens makers Largan and Genius, plus electronics assembler Hon Hai. It also places notice on ODMs Quanta (#1 ODM in Venture Outsource 2010 rankings) Pegatron and numerous other vendor / supplier Apple supply chain benefactors. (See: Top 10 EMS / ODM company rankings)

 

Figure 1: Projected Apple supply chain

Projected Apple supply chain vendor sales contribution

 

Fubon’s report also discusses wider anticipated operator networks for Apple’s iPhone plus the early entry for the iPhone into non-US markets and how Fubon believes the iPhone will resume its momentum from the September quarter this year resulting in subsequent potentially strong catalysts for Apple’s overall supply chain providers.

On entry into non-US markets, the iPhone 4S will be available in 22 more countries – as of publishing of this article – and more than 70 countries by the end of 2011.

 

Figure 2: Apple drivers chart

Apple product drivers

 

Fubon also writes caution in their report regarding Apple’s iPad supply chain due to what the research firm believes to be client-driven cost reduction pressure, from the adoption of a higher cost screen for the iPad 3 (but at similar retail pricing) and a potential price cut for the existing iPad 2 next quarter.

 

Figure 3: Fubon Research projected demand for iPhone, iPad

Projected demand for iPhone and iPad Apple products




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