Apple Continues to Squeeze Suppliers as Chinese Telecoms Slash iPhone Prices

Tech titan Apple Inc. (NASDAQ:AAPL) is facing a lot of headwinds with its flagship iPhone device, and these issues don’t look to be dissipating any time soon.

From the Wall Street Journal this morning:

In recent months, Apple suppliers say the Cupertino, Calif., company has told them to accept price cuts for parts destined for the next-generation iPhone while cutting forecasts for order volume. This is likely to hurt some suppliers’ earnings in the second half of the year.

This report is nothing new, as we wrote about if a few weeks ago. What is new, however, is a report that Chinese telecoms are now discounting iPhone prices:

Meanwhile, in the past two weeks, China Telecom Corp. has started selling unlocked 16-gigabyte iPhone 6s models for 4,288 yuan ($642), based on checks at its retail outlets. That is below a price of 5,288 yuan listed on Apple’s China website. Rival carriers China Mobile Ltd. and China Unicom Corp. have also offered fresh iPhone discounts, although they aren’t as steep as China Telecom’s. In the U.S., major telecommunications operators sell the unlocked 16-gigabyte iPhone 6s for $649.

While carriers typically discount iPhones before new-model launches, it is rare for iPhones to be cheaper in China than in the U.S., as a combination of import duties on components and value-added taxes boosts prices.

Add this development to the growing list of iPhone concerns for Apple, which also includes sharply waning smartphone market share. The iPhone’s Q2 share of the smartphone market plummeted 12% year-over-year to just 12.9%. Chief competitor Samsung’s share rose to 22.3%, in contrast.

Apple is in dire need of a major update to its struggling iPhone lineup, but this month’s big iPhone event will likely only bring incremental upgrades to existing devices.


Apple shares were up slightly in premarket trading this morning to $106.26. AAPL has gained about 1% year-to-date, versus a 7% rise in the benchmark S&P 500 during the same period last year.

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