Apple facing higher costs in its supply chain

Apple Inc.'s suppliers in Taiwan are concerned that as the local dollar climbs relative to the rest of Asia's currencies, earnings will fall and could potentially lead to higher prices for products. The Taiwanese dollar has increased more than 2.5 percent against the greenback over the past month.

The biggest contract manufacturer of Apple's electronics, Hon Hai Precision Industry Company, would potentially suffer a 0.7 percent reduction in net income if the currency experiences a 1 percent gain in value. Many of the firms in Taiwan are "export-oriented, so if the strong currency continues we might have to think about raising prices," CFO of Apple supplier, Wintek Corp., said in an interview.

The currency shows no signs of depreciating in value against the greenback because of the Fed's move to pour $600 billion into the economy. Wee-Ming Ting, the head of regional fixed income at Pictet Asset Management, said in an interview that there is "still more room for the Taiwan dollar to strengthen." As a result of the currency appreciation, Apple forecast profit that will rise less than analysts expected.

Apple will most likely enter into supplier contact negotiations to keep its profit margins high. However, if the greenback continues to depreciate, the task will be increasingly difficult.