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Apple wants to remove Japan from the supply chain?

The proportion of electronic components supplied by Japanese companies in the iPhone has been on a decreasing trend in recent years. Specifically, with the iPhone 12, this ratio is only 13.2%, while the components of Korea, Taiwan, and China continue to increase.

The proportion of components supplied by Japanese companies in the iPhone is decreasing (Artwork)

Why does Apple want to remove components from Japan?

The reason the iPhone uses more Japanese components in the past has to do with the replacement of Apple’s CEO. In the Steve Jobs era, Apple introduced the concept of “making unique products by assembling extremely popular parts”, so the Mac and iPhone were born on this concept.

About 6.7 years ago (the golden age of the iPhone 5s and iPhone 6 series), Japanese electronics companies such as Murata Manufacturing Co., TDK, Alpine Alpine and Taiyo Yuden still dominate the chain. supply. Until now, Murata’s stable voltage, ceramic capacitor multi-layer noise reduction chip and electric wave filter, as well as high capacity, high performance battery of TDK are still being adopted by iPhone12. However, the Japanese companies’ contribution to Apple products is increasingly limited.

The main reason why these Japanese companies’ share of components in Apple’s new phones drops around 10% is surprising. Not because the technological capabilities and competitiveness of Japanese electronics companies have declined, but the biggest cause is Apple’s own change.

After CEO Tim Cook took office, the policy of the “Apple family” changed, which meant integrating as much advanced technology as possible into all components such as semiconductors, CPUs, monitors, and cameras. . Previously, Apple used advanced technology despite the cost, of course, the high price, the performance of the phone was significantly improved, so sales were also high. However, for the past 3 years, the iPhone’s selling price has been too high, leading to poor sales. The 256G price of the iPhone 12 Pro Max even goes up to 33 million dong.

Affected by this, Apple adopted cheaper parts to lower the price of the iPhone. The cheapest version of the iPhone 11 was priced at around 18 million, which has sparked heated discussions. As a result, the proportion of parts and components of Korean and Taiwanese manufacturers is constantly improving, technology capacity is expanding, and on the contrary, the proportion of parts and components of Japanese companies. decrease again.

The benefits and risks of electronic component manufacturers dealing with Apple

Although the use of Japanese parts in Apple’s cell phones has declined, that has not meant a decline in profits for Japanese electronics companies. The number of orders from suppliers to Apple is determined in an annual tender. Therefore, if it is not a business with high market share in the industry, even if it receives an order in a certain year, it is very likely that an order will not be obtained next year.

As Apple’s sales slowed, most Japanese electronics companies started partnering with Chinese smartphone manufacturers. While that is not a complete delineation with Apple (some Japanese suppliers still consider Apple an important customer), its former dependence on Apple is no longer.

At the same time, some small and medium enterprises that cannot stand the “fluctuation” of delivery volume are afraid to do business with Apple, which is not conducive to the growth of these businesses. Apple’s advantage in the smartphone market is no longer the same, but for manufacturers of electronic components, dealing with Apple still means a lot.

On the other hand, some Chinese smartphone makers are still counting on Apple. Parts and components delivered to Apple are also considered to have influence on the brand, so having a business relationship with the “Apple family” not only benefits but also facilitates customer growth. new products. The iPhone 12 series is still expected to create a new super cycle, it can be said that Apple still maintains its previous strength.

Therefore, although Japanese electronics companies no longer focus on an Apple partner as before, Apple is still a major customer of these Japanese suppliers. Although Japanese components companies are still highly regarded by Apple, in the future, if they want to get new business opportunities, they will need to change their strategy.

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