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Who’s on Apple’s Supplier List?

{complink 379|Apple Inc.} is changing, perhaps faster than its late CEO and cofounder Steve Jobs might have permitted. Last week, for the first time in its history, the company released a list of companies that receive “97 percent of Apple's procurement expenditures for materials, manufacturing, and assembly of Apple's products worldwide.” That's not all. It also said it has joined the Fair Labor Association, which focuses on ending “sweatshop conditions in factories worldwide.”

An in-depth review of the list indicates that Apple hasn't stacked all its eggs in any single supplier's basket, not even in the contract manufacturing sector, where {complink 2125|Foxconn Electronics Inc.} is typically seen as its major service provider. After reviewing the list, I concluded that Apple has at least three suppliers for every single part it needs to make its products.

When you consider the history of the company, the significance of these moves really strikes home. If Apple can make this extensive and unusual disclosure, this industry, where supply chain information is considered sacrosanct, can make advances where others reluctantly thread. Apple is a secretive company known for closely guarding product design and information. Only through often unreliable leaks or employee missteps has anyone been able to determine what it plans to introduce next. Other consumer electronics companies often provide such information months in advance.

In fact, outside of a product teardown analysis, which typically occurs only after a device has been shipped, it was almost impossible to know which companies were on Apple's closely guarded approved vendors' list until last week. Apple has benefitted greatly from the speculation fever built up around each product announcement, since it provides very few details, if any, ahead of time. An announcement planned for this week, for example, has already generated huge speculation that Apple will be making a huge splash in the educational and publishing markets. Neither Apple nor any of its partners have said a word about the nature of its plans.

Further, Apple is a notoriously difficult taskmaster. Its relationship with even the closest suppliers and contractors are known to be rocky as a result of its stringent demands. The company puts strict terms on suppliers, demands the highest quality and delivery standards at the lowest possible prices, and enforces a no-disclosure policy whose violation could result in a relationship being terminated.

Despite the constraints, many electronic component vendors and contract manufacturers jostle to be counted among Apple's service providers. It's not so difficult to see why. With almost $65 billion in cost of goods sold in the fiscal year that ended Sept. 24, Apple is one of the electronics industry's biggest buyers of components and a desirable customer for third-party service providers. Its fast growth and huge, fanatical following in several large markets guarantee voluminous initial sales for most of its products. This translates into huge shipment for the companies that get their products designed into the devices.

There are other gains, specifically with regard to goodwill and market valuation. Before last week's announcement, just being able to whisper that your company had a supplier relationship with Apple was worth millions in goodwill, but now that the company itself has released a list, the news holds some delightful thrill for the lucky ones that made the list.

Please indulge me. I would like to mention some of the leading electronic part vendors that made the list, including semiconductor vendors like Advanced Micro Devices, Analog Devices, Broadcom, Cypress, Elpida, Fairchild, Hitachi-LG, Hynix, Infineon, Intel, Intersil, Linear, LSI, Macronix, Maxim, Microchip, Micron, NEC, Nvidia, Qualcomm, Renesas, Samsung, SanDisk, Sharp, Sony, ST, TI, Toshiba, and Triquint. LG Display, Toshiba Mobile Display, and the semiconductor vendor International Rectifier made the cut. So did the passive/connector makers Amphenol, Molex, Murata, Taiyo Yuden, and Vishay.

In contract manufacturing, it is now clear that Foxconn isn't the only company Apple has engaged to make its products. Flextronics and Jabil are assembling products for Apple, though what they make for the company is not known. Equally interesting are the small and largely unknown companies on the list. Many of them are printed circuit board companies, enclosure suppliers, and packaging companies in China.

It seems to me that Apple has spread out its procurement to ensure there's a fair representation of companies that provide the same services. This means it is unlikely to be held captive by supply snafus, disagreements, or any other hiccups at any single supplier. This multisourcing approach is an old but very important strategy.

By releasing this list, Apple has more than confirmed which companies are on its AVL. It has also told the market that some old principles are plainly golden.

19 comments on “Who’s on Apple’s Supplier List?

  1. SunitaT
    January 17, 2012

    After reviewing the list, I concluded that Apple has at least three suppliers for every single part it needs to make its products.

    @Bolaji, thanks for the post. I am really surprised that the Apple released its suppliers list.  Any particular reason behind choosing three suppliers? Is Apple trying to geographically diversify its suppliers or they all belong to the same region ?

  2. bolaji ojo
    January 17, 2012

    Apple released the supplier list to stay on the positive side of the news. The company has been hammered recently by negative news coming out of the facilities of some of its contractors (Foxconn) and suppliers. By releasing the list, Apple wanted to prove it is doing its best to be a responsible corporate entity and that its suppliers must also do the same.

    The company didn't pick 3 suppliers for each part item. I concluded from reviewing the list that it probably has at least 3 for each component but this is not exact as Apple didn't say who supplied what. We know what these companies supply and can deduce from this what they sell to Apple. The selection of more than one supplier for components is a standard industry practice to avoid getting mired in problems if a supplier runs into problems. In addition, it gives a company the opportunity to shop around for better pricing.

  3. charleso
    January 17, 2012

    Thanks for thr article,Bojali. Is a complete list of Apple's suppliers availabe?

  4. bolaji ojo
    January 17, 2012

    Charleso, The list was embedded in the article. I have pasted it below again. It is a pdf file. Please click here: Apple supplier list

  5. charleso
    January 17, 2012

    Yes, already found it. But thank you.

  6. _hm
    January 17, 2012

    Apple may need vendors to meet very high expectations. However, how is Apple's payment terms? How fast do they pay to vendors? Do they provide advace to some small vendors?

  7. Anand
    January 18, 2012

    Bolaji, I am surprised to see the name of “Samsung” is still in the list. Is Apple trying to find substitue to Samsung because we all know Apple already has file so many lawsuit against Samsung.

  8. bolaji ojo
    January 18, 2012

    Anandvy, Samsung is a conglomerate and its electronics division is one of the biggest in the industry. The company competes with but also supplies products to Apple and I doubt this will change anytime soon. Sure, they are entangled in lawsuits but that's at the OEM level. They still have supplier relationship in the components business.

    You are correct, though, that it is fair to assume Apple will try to find alternate suppliers to products it buys from Samsung. At the same time, Apple can't afford to cripple its operations by insisting on a no-Samsung deal when it needs the parts.

  9. bolaji ojo
    January 18, 2012

    _hm, It's difficult determining the payment terms for any major OEMs without anecdotal evidence from the suppliers. This is a no-go area for Apple suppliers. The company doesn't and won't allow suppliers to comment on such issues. However, there are a few ways of getting general information about this.

    I looked at Apple's quarterly account payable and it has stayed relatively flat at about $14 billion even as its sales continued to grow. In the last quarter, it actually went down more than $500 million (sales were down slightly too, sequentially.)This implies improving payment terms.

    Industry analysts also track things like accounts payable turnover ratio, which is used to determine how quickly a business pays partners. I don't know the numbers they have for Apple.

    Lastly, Apple has used its huge cash to secure supplies of critical components. The company has bought or paid ahead for flash components, for instance, and invested at one time $3 billion to guarantee future supply. It may and is probably doing the same for other components and with smaller companies. This kind of strategic information won't be disclosed in details.

  10. Barbara Jorgensen
    January 18, 2012

    This is really a breakthrough for Apple. Their supplier list is a lot more diverse than most people–including myself–thought. No doubt every name on this list earned its position.

    I will point out that an in-depth article on Apple's supply chain strategy was recently published I think in BusinessWeek. It was a very in-depth piece and I remember this because on of the writers, Peter Burroughs, worked with me at EB too long ago to mention. It was an investigative piece that I believe Apple did not cooperate with. Maybe this was the nudge that lead to this report–either way, interesting stuff.

  11. FLYINGSCOT
    January 18, 2012

    I applaud Apple for taking this bold and proactive step.

  12. garyk
    January 18, 2012

    Now that Apples Suppliers are identified US company's can ask why they can't be a Apple supplier? Assembling Company, chip manufacturer, case manfaucturer, etc.

  13. bolaji ojo
    January 18, 2012

    Garyk, There are many US companies on Apple's supplier list. Many of its biggest suppliers are in fact US companies, including Intel, Qualcomm, Broadcom, Molex, AMD and Jabil Circuit.

  14. Nemos
    January 18, 2012

    As you said, “This multisourcing approach is an old but very important strategy” and I believe it will help Apple, but still we don't know why Apple adapts this new strategy? Do we know the reason?

  15. bolaji ojo
    January 18, 2012

    Nemos, I have been pondering this and I am uncertain why Apple finally chose the option of publishing a list of all its suppliers. This is a list the company had kept secret for very long. A friend suggested during a recent discussion Apple published the list because the secrecy had served its purpose and might now be hurting the company. I tend to agree.

  16. Anne
    January 24, 2012

    “After reviewing the list, I concluded that Apple has at least three suppliers for every single part it needs to make its products”.

    This is the reason why Apple place its suppliers on strict terms and demanding the highest quality of products because it has many of thess suppliers at hand. The company can easily dictate for them and be in control, while the suppliers too have to agree so as to stay in business.

  17. Anne
    January 24, 2012

    I think Apple recent strategy of publishing its suppliers list is to let those suppliers know who is who, and to put them into serious competition to get the best out of them to its advantage of its stringent demand.

  18. JADEN
    January 24, 2012

    @Anandvy,

    Despite Apple and Samsung aparent disdain for eachother, samsung is one of the companies that manufacture “brains” of tablets and smartphones for Apple.

  19. Anne
    January 24, 2012

    Apple indeed is not putting its eggs in a single supplier's basket, I think for the fact that if one fails, one will pass.  Seagate Technologies, Western Digital Corporation and Hitach-LG Data Storage are their data storage suppliers too.

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