Topic: Supply chain
This has been a long-running saga with several false starts in reporting a conclusion of the deal, but Toshiba has now finally announced an agreement on the sale of its memory business to a consortium led by Bain Capital for two trillion yen, or roughly $18 billion. Apple is among several companies providing funding for the deal, and it looks like it’ll end up paying about $1.5 billion for its stake. Ensuring that Toshiba’s memory business remained a going concern and that it secured its share of its output was paramount to Apple given the constraints and competitiveness in the global memory market, which has pushed up costs and prices over recent months while boosting Samsung’s memory business enormously. Given the frustrations Apple has experienced in having to rely on Samsung as a supplier for OLED screens in an equally constrained market, this long-term imperative will have taken on even greater significance lately. There are additional complexities in the deal because Western Digital, which owns several joint ventures with Toshiba, continues to oppose it, but it looks like it should now go ahead.
Imagination Technologies, whose GPUs Apple said it would soon stop using back in April, prompting a massive selloff in the stock and a decision to explore strategic options, has announced that it’s agreed to sell most of its business to a Chinese-backed private equity firm, Canyon Bridge, with Silicon Valley investment fund Tallwood Partners buying the MIPS business it had previously said it might sell separately. Apple, of course, announced a GPU designed in-house at last week’s iPhone event, which means its abandonment of Imagination Tech as a chip supplier is going even more quickly than we might have thought. Since April, the story of Imagination has been a cautionary tale about what a double-edged sword being an Apple supplier is – on the one hand, a huge boon to your business, and on the other hand a massive risk that it someday pulls the plug because it’s found an alternative supplier or simply decided it can do things itself. It’s good to see Imagination find a way out, but the acquisition price of 182 pence per share, a significant premium over its recent share price, is still way below its high of 291.50 right before the Apple news came out.
★ Apple Reportedly Siding with Bain in Toshiba Memory Bid (Sep 14, 2017)
LG and Apple Said to Invest in OLED Manufacturing Capacity (Jul 25, 2017)
This is exactly the kind of speaking out of turn that Apple suppliers absolutely know not to engage in, so it’s baffling that Wistron’s CEO would have been so careless. Wistron, of course, is the vendor Apple is using for its first foray into manufacturing in India, and this is the kind of thing that tends to jeopardize those relationships. It’s not a huge revelation – Apple joined the consortium that manages the Qi wireless charging standard which it already uses in the Apple Watch a while back. But it’s one of a number of new hardware features that are likely to make it into the next iPhones – certainly not the headline feature, but one of a checklist of features that will be used to drum up demand. On the other hand, I remain skeptical of the value of mat-based wireless charging – though there’s some appeal to just putting your phone down to have it charge, that really requires several chargers in different places around your home and/or office to be useful, and it’s actually more limiting than traditional plugged-in charging for things like making phone calls or typing on your phone, where you might want to hold it while it’s charging. I’m still most curious to see whether Apple has made any advances in this regard and how it will both approach and sell wireless charging as a feature.
via The Verge
KGI Reports High-End 2017 iPhone Production May Be Delayed (Apr 24, 2017)
Apple GPU Supplier Imagination Tech Says Apple Plans to Build its Own GPU in 1-2 Years (Apr 3, 2017)
This already feels likely to be one of the biggest news items of the week (incidentally, you can now use the Like button below to vote for this post if you agree – the posts that get the most votes are more likely to be included in my News Roundup Podcast at the end of the week). There have been ongoing reports that Apple would like to build more of its own in-house technology, and GPUs have seemed at least a candidate given that Apple was said for a while to be mulling an acquisition of the company, and has been bringing Imagination Tech employees on board since the deal didn’t go ahead. The GPU obviously has a number of existing applications, but GPU technology has increasingly been used for AI and machine learning, so that’s an obvious future direction, along with Apple’s reported investment in AR. Apple’s ownership of its A-series chips (and increasingly other chips like its M and W series) is a key source of competitive advantage, and the deeper it gets into other chip categories, the more it’s likely to extend that advantage in these areas. This is, of course, also a unique example of Apple making a direct statement about a future strategy (albeit via a third party): as Apple is IMG’s largest customer, it had to disclose the guidance from Apple because it’s so material to its future prospects – the company’s share price has dropped 62% as of when I’m writing this.
Apple Files its Supplier Responsibility Report for 2016 (Mar 27, 2017)
Apple has filed its Supplier Responsibility Report for last year, and it shows decent progress on several fronts. This BuzzFeed piece ties the report into a broader picture of planned deregulation in this area by the Trump administration, and notes that Apple has both opposed that deregulation and pledged to continue to report on its own efforts even if the regulations go away. Conflict minerals are a complex area of Apple’s supply chain, not least because it doesn’t deal with many of the suppliers directly, but also because many operate in parts of the world which have little regulation or transparency over the conditions under which minerals are mined. But it sounds like Apple is making progress around cobalt, one of the areas in which it was accused of not doing enough last year, and in other areas too.
Here’s Why Apple’s 10th Anniversary iPhone Will Likely Cost More Than $1,000 – Fast Company (Feb 8, 2017)
The headline is focused on the price, but there’s some interesting detail in the piece that’s in some ways more important (and likely more accurate). Some of this confirms earlier reporting about OLED edge-to-edge screens, and a home button integrated into the screen. There’s some new information in there too, though, about an integrated 3D sensor, though it’s not clear what it’ll be used for (AR is one obvious bet given Tim Cook’s enthusiastic remarks about the technology). The point here is, though, that the $1000 price point is fully $230 above the base price for today’s 7 Plus, and so it would have to incorporate a lot of additional wizardry to justify that premium. I think it’s far more likely we see another roughly $100 step up from the Plus to $870, though of course with the right storage configurations that’ll easily rise over $1000.
via Fast Company
Slower-than-expected iPhone 7 sales prompt Apple to cut production by 10%, report claims (Dec 30, 2016)
There are two problems with these reports – firstly, they come out every year in some shape or form, and have a far from perfect correlation with poor sales of iPhones; and secondly, the scale of the cuts is always ambiguous – is the 10% relative to last year at the same time, a cut from Q4 to Q1, or something else? The latter would obviously be expected given the usual cyclical drop from Q4 to Q1, while the former would be entirely unexpected. But as usual this Nikkei report drove lots of “poor iPhone sales” headlines despite all that.