4 ms·

Yes, that's certainly a valid reaction, and is likely partially true. It's also true that Apple is very well known for very hard negotiation and squeezing their

by s1mon 3y ago

Yes, that's certainly a valid reaction, and is likely partially true. It's also true that Apple is very well known for very hard negotiation and squeezing their suppliers until there's only a few percent margin. You'd have to be insanely good at controlling all of your costs to make money all the time under that constraint. If yields change or component/material prices fluctuate the wrong way any predicted profit could disappear. Apple also pays suppliers on net 90. With inflation the way it's been, any miscalculation there will sink things. Not all suppliers know how to be banks too. Considering how much cash Apple has, this is really reprehensible. As a supplier to Apple, the gross numbers are so seductive since they are larger than just about anything else, but the net numbers are orders of magnitude less.

CharlesW 3y ago
> It's also true that Apple is very well known for very hard negotiation… No successful company is over-paying suppliers.
- Centigonal 3y ago
  There's a difference between over-paying suppliers and being literally the best in the world at squeezing suppliers, which Apple is IMO. You can argue (and I will argue) that Apple's skill at squeezing their suppliers while still maintaining reliable supply chains is a huge part of why they're the biggest company in the world (and also why Tim Cook and not Scott Forstall or Jony Ive succeeded Jobs). That squeezing has real human costs, which Apple is insulated from. They've outsourced the majority of their labor (and related liability) to a global cadre of high-volume, low margin suppliers, while capturing most of the value created by that labor by owning the Apple brand and maintaining tight control of information, resulting in an asymmetric risk/reward profile for Apple inc.
  - mistrial9 3y ago
    "those who do business with Dell, go out of business"
    - mistrial9 3y ago
      I fail to understand the negative votes (above), Dell did and does exactly what is attributed to Walmart and others in this thread. It is known among manufacturers but held in secrecy like so much in that business. Source: multiple years in used computer industry in California
- throwaway09223 3y ago
  Successful companies overpay suppliers all the time - especially if they're growing very fast and are focused on scaling growth over cost efficiencies. Large companies who've already scaled up their products are more incentivized to focus on cost cutting.
  - geodel 3y ago
    Send this list of overpayers to Wistron. Please help them make some money.
- smoldesu 3y ago
  > No successful company is over-paying suppliers. If Apple did not over-pay their suppliers, the M1 would not have been manufactured on the 5nm node.
  - spiderice 3y ago
    That isn't over-paying. That's paying what they need to get the best. Unless you have some evidence that they paid X for 5nm when they could have paid less.
crazygringo 3y ago
> You'd have to be insanely good at controlling all of your costs to make money all the time But to be fair, that's what hardware manufacturers are supposed to be good at. The whole point is that the ones who are good at it make money, the ones who aren't go out of business. That's capitalism in a nutshell at every level, and manufacturing especially.
lesuorac 3y ago
> Apple also pays suppliers on net 90. I've always been surprised at how much of the business world runs on credit. You hear stories about how payments have been months-years delayed (or never show up). I'd like to think if somebody got more than 100days behind I'd cut them off from the next shipment but never been in that spot.
- ekidd 3y ago
  Apparently, one of the reasons that RedHat survived the dotcom crash was that they were absolutely merciless about companies that didn't pay on time for RedHat's engineering/consulting services. I recall someone who had several on-site RedHat engineers at his company, doing some kind of Linux work. The company missed one Friday payment to RedHat. Every single RedHat engineer was gone the following Monday, never to return.
  - AYBABTME 3y ago
    Any source? Looks like a very interesting story, would love to read more.
coredog64 3y ago
The way that China has handled this is that they view those razor thin margins as an opportunity to move up the value chain. 1) Foxconn opens an assembly plant 2) Supporting infrastructure is backfilled into the area 3) There’s now a geographic industrial concentration that can support domestic electronic designers
halJordan 3y ago
It's good to know the full story, but it's reprehensible? I don't want to cast stones but a really easy connection to make is that wistron took the contact knowing they could only "be profitable" by not paying their labor. So I'm supposed to hate Apple for doing what a business is supposed to do (and frankly being excellent at it). And I'm supposed to champion Wistron for what they did? That's reprehensible if we're throwing the term around.
- harry8 3y ago
  >And I'm supposed to champion Wistron? Why would you think that? There's no need to think that at all when considering the actions of Apple.

by s1mon 3y ago

CharlesW 3y ago

> It's also true that Apple is very well known for very hard negotiation… No successful company is over-paying suppliers.

Centigonal 3y ago
There's a difference between over-paying suppliers and being literally the best in the world at squeezing suppliers, which Apple is IMO. You can argue (and I will argue) that Apple's skill at squeezing their suppliers while still maintaining reliable supply chains is a huge part of why they're the biggest company in the world (and also why Tim Cook and not Scott Forstall or Jony Ive succeeded Jobs). That squeezing has real human costs, which Apple is insulated from. They've outsourced the majority of their labor (and related liability) to a global cadre of high-volume, low margin suppliers, while capturing most of the value created by that labor by owning the Apple brand and maintaining tight control of information, resulting in an asymmetric risk/reward profile for Apple inc.
- mistrial9 3y ago
  "those who do business with Dell, go out of business"
  - mistrial9 3y ago
    I fail to understand the negative votes (above), Dell did and does exactly what is attributed to Walmart and others in this thread. It is known among manufacturers but held in secrecy like so much in that business. Source: multiple years in used computer industry in California
throwaway09223 3y ago
Successful companies overpay suppliers all the time - especially if they're growing very fast and are focused on scaling growth over cost efficiencies. Large companies who've already scaled up their products are more incentivized to focus on cost cutting.
- geodel 3y ago
  Send this list of overpayers to Wistron. Please help them make some money.
smoldesu 3y ago
> No successful company is over-paying suppliers. If Apple did not over-pay their suppliers, the M1 would not have been manufactured on the 5nm node.
- spiderice 3y ago
  That isn't over-paying. That's paying what they need to get the best. Unless you have some evidence that they paid X for 5nm when they could have paid less.

crazygringo 3y ago

> You'd have to be insanely good at controlling all of your costs to make money all the time But to be fair, that's what hardware manufacturers are supposed to be good at. The whole point is that the ones who are good at it make money, the ones who aren't go out of business. That's capitalism in a nutshell at every level, and manufacturing especially.

lesuorac 3y ago

> Apple also pays suppliers on net 90. I've always been surprised at how much of the business world runs on credit. You hear stories about how payments have been months-years delayed (or never show up). I'd like to think if somebody got more than 100days behind I'd cut them off from the next shipment but never been in that spot.

ekidd 3y ago
Apparently, one of the reasons that RedHat survived the dotcom crash was that they were absolutely merciless about companies that didn't pay on time for RedHat's engineering/consulting services. I recall someone who had several on-site RedHat engineers at his company, doing some kind of Linux work. The company missed one Friday payment to RedHat. Every single RedHat engineer was gone the following Monday, never to return.
- AYBABTME 3y ago
  Any source? Looks like a very interesting story, would love to read more.

coredog64 3y ago

The way that China has handled this is that they view those razor thin margins as an opportunity to move up the value chain. 1) Foxconn opens an assembly plant 2) Supporting infrastructure is backfilled into the area 3) There’s now a geographic industrial concentration that can support domestic electronic designers

halJordan 3y ago

It's good to know the full story, but it's reprehensible? I don't want to cast stones but a really easy connection to make is that wistron took the contact knowing they could only "be profitable" by not paying their labor. So I'm supposed to hate Apple for doing what a business is supposed to do (and frankly being excellent at it). And I'm supposed to champion Wistron for what they did? That's reprehensible if we're throwing the term around.

harry8 3y ago
>And I'm supposed to champion Wistron? Why would you think that? There's no need to think that at all when considering the actions of Apple.