Apple may have supply chain changes in the works

on Thursday, January 3, 2013

Apple may have supply chain changes in the works Tech giant Apple appears to have major supply chain changes in the works as it prepares to launch the production of its latest iPads and iPhones.

The company famously had a close relationship with rival Samsung and relied on the South Korean company to supply some of the essential chips used in Apple products. However, recent lawsuits regarding patent infringement have caused the partnership to deteriorate and Apple was reported to be seeking new suppliers several months ago.

New Taiwanese producer anticipated
Recent reports claim Apple may have found a new producer for its A6X processor, an essential component used in some iPad models. The AFP reported on a Taiwan Commercial Times story that revealed Apple is in talks with Taiwan Semiconductor Manufacturing and the firm may take over production Samsung was once responsible for. The Taiwanese company will start a trial period in the first quarter of the year and depending on the outcome, could replace Samsung as a vital supplier for the processors.

While the switch could have an impact on Apple's carefully-planned procurement policies, negotiating with a new manufacturer could give the company the ability to enjoy greater cost savings on the production process or lower labor costs.

New iPhone lineup possible
Offering a trial contract to a new supplier isn't the only change Apple is making that could result in supply chain changes. The company is also rumored to be looking into providing a greater range of sizes and colors for its next iPhone lineup, which would be an enormous change, welcomed by loyal Apple customers. The company began to break out of the standard iPhone model last year, when it introduced the iPhone 5, but the upcoming model may offer even greater variety to those looking to purchase one of the yet-to-be-released iPhones. Though the reports have not yet been confirmed by the company, information shows that the product (likely to be called the iPhone 5S) will offer shoppers more choice.

Such additional choices may be appealing to consumers, but they could result in hold-ups in the supply chain, resulting in frustration over the long term. If too many customers are seeking the same model and the company produces only a limited number, shoppers may find themselves having to settle for a different item. Similarly, Apple may over or under anticipate the demand for a certain size or color, resulting in significant supply surpluses or limitations.

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