From Wayne Ma’s “As Apple goes, so go its suppliers—but worse” in Thursday’s The Information ($):
The gift of a big Apple contract can, for suppliers, later turn into a curse if Apple’s sales slow or Apple drops them. The share price declines at Apple and many suppliers come at a time when falling iPhone sales contributed to a 5% decline in Apple’s holiday sales. Another factor is the contraction of the broader smartphone industry, which saw global smartphone shipments shrink 4% in 2018, faster than the 2% decline in 2017, according to research firm IDC.
Horace Dediu, founder at market analysis firm Asymco, compared Apple’s position with that of apparel brands that capture the overwhelming majority of value in their industry rather than manufacturers.
“A company that becomes successful through disruption tends to impoverish its supply base…and tends to become a gravitational force field attracting profits,” said Mr. Dediu, who has studied Apple’s supply chain.
My take: Evidence of Apple’s impoverished supply base is abundant in the 16-page spreadsheet Ma has constructed from Apple’s annual list of suppliers. Results for the year 2018 range alphabetically from AAC Technologies (-67%) to Zhen Ding Technology (+22%).