Disruptions to Apple’s manufacturing chain and cost control measures are squeezing Chinese suppliers, report says
- Apple’s supply chain crisis has affected the financials of multiple Chinese suppliers and distributors
- Apple has added more suppliers from mainland China than anywhere else to its list of vendors over the past three years
Disruptions to Apple’s vast supply chain and cost control measures amid a pandemic-induced chip and components shortage are causing pain for the US tech giant’s Chinese suppliers and distributors, according to a local media report.
Apple’s supply chain crisis has affected the financials of multiple Chinese suppliers and distributors and this has “set off alarm bells” for companies that are “overly dependent” on Apple, Chinese newspaper the Securities Daily, reported on Thursday.
It is clear that being an Apple supplier is no longer a guarantee of stellar business growth.
Among Apple’s mainland suppliers, Shenzhen-listed Lens Technology reported a 35 per cent year-on-year decline in net profit to 988.8 million yuan (US$155.3 million) during the July to September quarter, while Shenzhen Sunway Communication Company turned in a net profit of 305 million yuan, a 26.8 per cent decrease during the same period.
Meanwhile, Shenzhen Deren Electronic Company recorded a net loss of 65 million yuan or a 227 per cent year-on-year plunge in the third quarter. Suzhou Victory Precision Manufacture Company recorded a net loss of 30 million yuan – a 176 per cent decrease.
“Amid rising raw material prices and the supply chain crisis, Apple has further compressed the profit margins of its suppliers to reduce costs,” Lin Zhi, principal analyst at Wit Display, was quoted by the newspaper as saying. “This has brought greater cost pressures for suppliers.”
