Apple dominates electronics supply chain

Posted by Trent Nouveau

Apple is slated to snap up nearly $28 billion worth of semiconductors, up 15 percent from $24 billion in 2011.



According to senior IHS iSuppli analyst Myson Robles-Bruce, Cupertino is increasing its buying at a faster rate than other top firms, effectively solidifying its hegemony over the chip market.



"Apple is maintaining its lead in semiconductor purchasing because of continuing strong demand for its products - combined with the company's capability to maintain beneficial relationships with more than 150 suppliers that provide components or offer manufacturing and assembly services," he explained.

"Aside from maintaining its global dominance in chip purchasing, Apple is also outgrowing the other OEMs and making gains in the various regions of the world. For Apple, this translates into competitive advantages when it comes to manufacturing electronic products."



Robles-Bruce also noted that while Apple has already conquered the smartphone and tablet segments, the company was engaging in another kind of conquest behind the scenes: the dominance of the electronics supply chain.



"Such a dominant position provides critical benefits, allowing one to dictate semiconductor pricing, control product roadmaps and obtain guaranteed supply and delivery. For Apple, these benefits translate into competitive advantages, letting it offer more advanced products at lower prices, faster and more reliably than the competition," he said.

"[Cupertino] will continue to outgrow the other major OEMs in chip purchasing because of its clear vision of the future, which extends a few years out. This vision includes a strategy to not only update currently popular products but also achieve success in other areas of interest like the television segment."



However, despite the bullish projections of IHS iSuppli, Future Horizons principal analyst Malcolm Penn sounded a note of caution during a recent interview with TechEye staff.

"Apple is doing incredibly well at the moment but by god it is so fragile," Penn told TechEye. "It is a two product company, and the two are really the same damn thing." 

One, Penn said, has a phone chip and one without - essentially, according to Penn, Apple has designed boutique items that are just likely to be out of fashion as they came into fashion.

"[Yes], You have to take your hat off to them... But it's probably exceeded even their wildest expectations as to where it might end up... When you look at the tablet market, that is the most fashionable item you can imagine... [Remember], customers don't want a Samsung tablet, or an HD tablet, just an Apple tablet, which means they're buying Apple - the brand charisma that goes with having a pair of Nike [sneakers] or whatever," he added.