Asia supplies and produces more than half of Apple’s major consumer products, one market research firm estimates. Some companies in Taiwan, where the economy depends largely on high-tech exports, live or die by Apple orders. Japan hopes to revitalize its once iconic tech sector after losing ground from 2000 to 2010 in part for lack of a grip on foreign markets, McKinsey & Co. says. Assembly plants in China, long dependent on export manufacturing, sometimes employ whole cities' worth of people to make Apple devices that are probably in a pocket near yours.
A lot of the contractors have made multiple generations of iPhone and they're expected to offer parts or assembly for the iPhone 7 as Apple develops that later in the year. Contractors that get serial deals from Apple include Taiwan-based assembler
We know who's who. Now how much of a hit will they take?
Apple will probably stick with its incumbents for the 7, which is expected to retain the major features of previous iPhones. It would switch contractors only to make a new “innovative feature,” says Eddie Han, analyst with the Market Intelligence & Consulting Institute in Taipei. “Overall, there will be not much change to the supply chain for the 7,” Han says. “Most of the time, what Apple does is to switch from A to B and B to A.”
That means orders would just get smaller. Apple says in a statement revenues of $51 billion in the first quarter will ease to between $41 million and $43 million in current quarter. That’s a clue to how many fewer orders might be placed. (Apple was not available early Wednesday for comment.) Actual declines will unwind over the next three to 12 months as existing contracts run their courses, says Sean Kao, research manager with tech market research firm IDC in Taipei. Assemblers will feel the pinch first, being "closer" to the consumers who ultimately decide how many devices sell, he adds.
Perhaps as a preview to what's ahead, Pegatron froze hiring at a Shanghai assembly plant in November in view of slow iPhone 6S demand, China's state-run China Daily newspaper reported. About 100,000 Chinese employees work on Apple devices, according to a labor rights group report last year. Other contractors may had seen Apple's quarterly figures coming before the April 26 announcement and retrenched already as needed, Kao says. Because of client confidentiality, suppliers and assemblers seldom disclose details of their work for Apple. “They probably knew the results,” Kao says. “If they were going to lay people off, they would have done it already.”