Apple reportedly 'demands' 10% price cut from key iPad suppliers as orders increase
The iPad maker is said to have "demanded" suppliers cut their prices, as Apple believes they are due to cash in on surging sales of the touschreen tablet. According to DigiTimes, component makers reportedly expect Apple to ask for more cuts again in the third quarter of 2011.
"Since Apple's tablet PC shipments are expected to grow 70% sequentially to eight million units in the second quarter, significantly benefiting related upstream component suppliers, Apple has demand(ed) its suppliers to provide cuts in return," the report said, citing the Chinese-language Economic Daily News.
Apple has reportedly made the demands to companies that supply it with printed circuit boards, optical components, battery modules and touch panels. It wants quotes for the second quarter of 2011 to be cut by 10 percent.
Earlier this month, Apple revealed that total iPad sales had reached 25 million in just 14 months. That total also suggested that the company is on pace to exceed sales of 8 million iPad 2 units this quarter.
In its last fiscal quarter, Apple reported sales of 4.69 million iPads, a number that came in lower than Wall Street expectations of the iPad 2 launch. But the company's chief operating officer, Tim Cook, admitted that his company was struggling to meet demand, characterizing the situation as "the mother of all backlogs."
In March, it was suggested that supply issues for touchscreens could result in a higher cost to Apple for components. The touch display on the new iPad 2 was estimated to cost Apple $127 for each device, an increase of more than $30 from the first-generation iPad.
75 Comments
greed
gotta love it....
Is this a prolog to the Cook era? This is his area now.
greed
gotta love it....
yeah those factories have no soul, trying to make as much as possible of these iPads I tell you!
Apple has to try to maximize savings.
It's not like Apple has $70 billion sitting around or anything. Oh, wait.
Does anyone think Apple will drop the price 3%?
Last time I checked my econ book, it said that when demand outstrips supply, the cost of the items go up accordingly. Only someone as strong as Apple can attempt to upend that truism, and have enough clout to back it up. Only Apple, having alternative suppliers, will keep this supply-side price creep in check (hopefully).
Also, keeping other suppliers working (secretly) on the next iterations of the components, keeps the suppliers from raising the price through the roof, lest they get completely frozen out of the next great products.