Manufacturer of the world’s most popular smartphone has a great power over the component suppliers. Choosing components of a certain manufacturer, Apple entirely determines its fate. To supplier end cooperation with the “Apple” giant, often means disaster, especially in the absence of a backup plan.
Last week, the company Imagination Technologies Group has announced that in the next two years, Apple plans to abandon its graphics processors and use native. Given that half of the annual revenue of the Imagination to 120 million pounds comes from Apple, the company was in a difficult situation. Its shares have fallen by 70%, because of such developments, investors could not imagine even in their worst dreams.
This week the shares of the other partner Apple – the British manufacturer of microchips Dialog Semiconductor – collapsed by 36% after analysts suggested that Apple intends to refuse to supply the company. “There is good evidence that Apple is developing its own integrated circuit for power management of batteries and intends to develop replace Dialog” — said an analyst with Bankhaus Lampe. 74% of the sales Dialog accounted for by Apple’s chips are used mainly for iPhone and iPad.
Online resource Statista made a chart with six companies, which largely depend on the plans of Apple.
“As our chart illustrates, many companies with different specialization closely tied with Apple receiving more than 50% of its annual income. Relying on one customer, they put themselves at risk, but Apple’s suppliers are frequently traded, with relatively lower p / e ratio than a similar company with a more diversified client base. It also puts Apple in an advantageous position in the negotiation of contracts, where the company can dictate their conditions”.
The reality is that high dependence on one client is always connected with risk. Now Dialog Semiconductor and Imagination certainly regret that I did not think about siding. While Apple leads in profits, its share in the smartphone market is relatively small.
High dependence on Apple from Cirrus Logic. According to analysts, its revenue is almost entirely dependent on Apple contracts, the rate reaches 85%. Examples of Imagination and Dialog clearly demonstrate than the end so closely related.