Shulou(Shulou.com)11/24 Report--

All previous releases of the iPhone series are carnival in the digital world. Less than a month after the release of the iPhone 14 series, there have been a large number of reviews of up owners who have dismantled it from beginning to end.

Different from the previous generation of iPhone 13 series, the new generation of iPhone 14 series flash memory comes from the domestic manufacturer Changjiang Storage for the first time. According to overseas news reports: this time, the iPhone 14 series uses at least three flash memories from Western Digital, Toshiba and Changjiang Storage.

Source: iFixit Apple uses domestic flash memory chips for the first time, indicating that the technical strength of Changjiang Storage has been recognized by Apple. According to public data, Changjiang Storage, founded in 2016, is a newcomer to NAND chips, but the independently developed fourth-generation 3D TLC flash memory has reached 232 stacked layers, comparable to first-tier giants in the industry, such as Western Digital and Toshiba.

It is worth mentioning that Changjiang Storage, which once provided memory chips to Huawei, directly touched the sensitive nerve of the United States and was accused of investigating whether Changjiang Storage violated the rules earlier this year.

Apple's iPhone 14 series of phones have been protested by several US senators about the purchase of NAND flash memory chips from China's Cheung Kong Storage Company, the Financial Times reported. Apple is required to be subject to strict scrutiny by the US Congress by publicly slandering the Chinese manufacturer of Changjiang Storage as a major privacy security loophole.

Under pressure from the United States, Apple announced that the iPhone, which will only be sold in China, uses the Changjiang NAND flash memory chip, and the data stored on the chip is completely encrypted.

Although Apple has been deliberately weakening the use of Chinese supply chain technology, it is undeniable that most of the iPhone is made in China.

1. Apple eats meat and supply chain drinks soup. In the smartphone field, there has always been a saying that "apples eat meat, suppliers drink soup".

As a synonym for high-end mobile phones, iPhone has extremely strict requirements on all kinds of hardware used. Being able to squeeze into Apple's supply chain proves that the quality of its products has reached the highest standard in the industry. And, rely on the first sales volume of iPhone industry, enough to allow a supplier to complete the accumulation, impact A shares and gem.

Of the 156 companies on the list of suppliers first published by Apple in 2012, only eight Chinese companies were on the list. As China's manufacturing industry becomes more sophisticated, more and more companies are on Apple's supplier list.

By 2020, there will be 96 Chinese manufacturers, accounting for nearly half of the top 200 major suppliers. By 2021, 12 new Chinese mainland companies have been added to Apple's supplier list.

According to the statistics of Ji WeChat, among the many domestic suppliers, 48 are listed in A shares, among which the largest market share are Lixun Precision and Gale, which provide connectors and acoustics for Apple, Lance Technology, which provides cover glass, and BOE A, which provides panels.

In addition to the larger market capitalization enterprises, there are 14 small and medium-sized enterprises listed on the gem, whose main business is to supply Apple and rely heavily on Apple. For example, Tianzhun Technology and Optic, which provide machine vision technology, Huaxingyuan Chuang and Jepter, which provide testing equipment parts, Haimxing, which provides laser equipment parts, Fu Liwang, which provides precision structural components, Matsui shares, which provide paint, and so on.

IPhone production line for suppliers, joining the "fruit chain (Apple supply chain)" means a rapid improvement in performance. Take Lixun Precision as an example. Lixun Precision, which was founded in 2004, acquired Kunshan Liantao Electronics into the fruit chain in 2011, mainly responsible for the production line of MacBook; won the share of Air Pods Pro100% contract manufacturers in 2017; and in 2020 Lixun Precision acquired two major foundry factories Wituang and Citong to become the first foundry iPhone manufacturers on the mainland.

In 2020-2021, Apple paid 63.843 billion yuan and 114.056 billion yuan in revenue, accounting for 69% and 74% of Lixun's total revenue.

There is a painful reality behind this seemingly beautiful report card. Under the total revenue of 114.056 billion yuan in 2021, the net profit of Lixun Precision was only 7.1 billion yuan. Obviously, the total revenue doubled, but the net profit decreased by 2.14% compared with the same period last year.

The logic is also very simple, because the manufacturer is too serious "Apple dependence", resulting in Apple has absolute bargaining power. Although the price of raw materials continues to rise as a result of the epidemic, Apple relies on its bargaining power to take whatever it wants from the fruit chain, passing on the rising costs to downstream suppliers.

The fruit chains can't give up the Apple business at all, they can only break their teeth and swallow.

2. In order to be obedient in the supply chain, in addition to absolute bargaining power, Apple is extremely strict with its suppliers, comparable to Victoria's Secret to treat its own models.

First of all, Apple requires its suppliers to be technologically advanced, especially not to change the configuration casually.

GTAT, iPhone's supplier of sapphire screens, has supplied sapphire materials to Apple since 2013, but during the partnership, Apple has been changing the product specifications of sapphire screens, not only drastically reducing production costs, but also requiring GTAT to produce a large number of sapphire screens on time and on time. In the end, GTAT was overwhelmed and shut down the plant.

In 2021, Jingdong became a screen supplier to Apple, successfully winning a 30 million OLED screen order for the iPhone 13 series, according to South Korean media THE Elec. However, the screen order was terminated by Apple because BOE secretly changed its screen design, and it was not until the iPhone 14 series that BOE finally entered Apple's supply chain.

Second, suppliers can't raise prices casually because Apple doesn't accept it.

Since 2022, due to the rising prices of various key materials for chips upstream, such as photoresist and CMP paste, the cost of contract manufacturing of chips has increased significantly. TSMC has increased the price of contract manufacturing of chips by 10% and 20%. As the core member of the fruit chain, TSMC gave Apple an VVIP price, only slightly increasing the contract manufacturing price of A-series processors by about 3%.

However, according to foreign media reports: Apple explicitly rejected TSMC's price increase request on September 26, and said it would transfer the chip contract manufacturing order to Samsung and other contract manufacturers. Once Apple gives the order to Samsung, TSMC will directly lose its largest customer of US $14.8 billion, which is too heavy for TSMC to bear.

Due to market pressure, TSMC may withdraw its request for a price increase for Apple.

At the end of the TSMC workshop, the supplier can't raise the price, but Apple can ask you to reduce the price.

Foxconn, Apple's largest manufacturer, is responsible for assembling most of the iPhone products and supplying OLED displays and glass fuselages. As Foxconn's status rose and its irreplaceability became stronger and stronger, Apple began to "knock" its biggest followers.

In 2016, Apple asked suppliers to reduce their quotations by 20%, which was opposed by Foxconn, saying that the price was unacceptable and that Apple orders would not be accepted without reasonable profits.

In the face of Foxconn's tough response, Apple immediately distributed iPhone and Air Pods orders to several other major contract manufacturers, such as Pegatron, Lixun Precision, and Willon, and continued to support the growth of other contract manufacturers to weaken Foxconn's influence.

In the end, under Apple's power, Foxconn, which has been continuously weakened by bargaining and bargaining power, can only listen honestly to Apple's demands.

In a word, if you want to eat the food of Apple, you must be obedient.

3. IPhone cannot be separated from China at present, iPhone 14 series OLED screens, organic light-emitting diode screens, speakers, batteries, flash chips and other places where you can or can not see are made by Chinese companies. According to US media, all Chinese-made parts already account for 25 per cent of the total value of iPhone 14.

But can domestic suppliers get 25% of iPhone 14's profits? The answer is no.

Under Apple's high-tech pressure and strict bargaining power, it is not easy to eat "apple rice" at ease. In 2021, Apple kicked 34 companies, including Ofeiguang, out of the supplier list without warning, causing the profit of Ofeiguang, which once ranked first in the world by shipments of mobile camera modules, to plunge 90%, and almost went bankrupt overnight.

The "Oufeiguang incident" also completely tore up the fig leaf of Chinese suppliers, and CCTV issued an appeal to Chinese suppliers: "to get rid of our dependence on Apple and diversify our layout."

The chips needed for smart cars have learned a lesson, and now suppliers are starting to get rid of Apple dependence and try to find a second growth curve in new energy vehicles, AR / VR, photovoltaic and other areas. For example, Oufeiguang, who was kicked out of the fruit chain, began to enter the field of smart cars and develop the image modules needed for new energy vehicles.

But it is undeniable that Apple's sales cannot be separated from China, and so can its production and manufacturing. But Chinese suppliers still have to struggle to break Apple's blockade on bargaining power.

This article comes from the official account of Wechat: zinc Finance (ID:xincaijing), author: sun Pengyue

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