Is it really true that Japanese chips have been abandoned by Apple?

Latest update time：2021-09-11 19:52

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Image source: Apple official website

Among the components of Apple's mobile phone "iPhone", the proportion of components provided by Japanese companies is showing a downward trend. The Nikkei article "By breaking down the iPhone 12 to see the leap of Korean components and the gap with Japanese companies" on November 21, 2020 pointed out that compared with the iPhone 11 sold on September 20, 2019, the proportion of components provided by Japanese companies in the iPhone 12 fell by 0.6 percentage points to 13.2%! In addition, the article also pointed out that the proportion of components provided by Korean companies is gradually increasing, such as switching from JDI's LCD screen to Samsung's OLED display.

Japanese companies used to have the largest share of components in Apple phones, but why has their share in the latest version of Apple phones declined? This time we interviewed Mr. Nobuo Imaka, a senior analyst at Rakuten Securities Research Institute who is familiar with the current electronic components industry.

Why does Apple want to “de-Japanize”?

It is said that the reason why previous Apple mobile phones used more Japanese components is related to the replacement of Apple’s CEO, that is, the change of Apple’s CEO caused the change of Apple’s characteristics.

During the Steve Jobs era, Apple came up with the idea of "producing unique products by assembling extremely ordinary parts", so the Mac and iPhone were both born based on this idea.

However, the company's policy has changed since the appointment of current CEO Tim Cook, which is to incorporate the most advanced technology into all components such as semiconductors, CPUs, displays, cameras, etc. as much as possible.

Since Apple is "obsessed" with high-end components, it uses components from many Japanese companies such as Murata Manufacturing, TDK, Alps Alpine, and Taiyo Yuden. Six or seven years ago (when the iPhone 5s and iPhone 6 series were developing rapidly), Japanese electronic component companies dominated the market.

Murata Manufacturing's stable voltage, noise-reducing chip multilayer ceramic capacitors and filters for filtering radio waves, as well as TDK's high-performance, large-capacity batteries are used in Apple 12. Today, Japanese companies are still contributing to Apple.

The main reason why the proportion of components from these Japanese companies in Apple's new mobile phones has dropped to around 10% is really surprising.

It is not that the technological strength and competitiveness of Japanese electronic component companies have declined. The biggest reason lies in the changes in Apple itself.

Apple used to adopt cutting-edge technology regardless of cost, and of course the price was high, and the performance of the phone was significantly improved, so the sales volume was also high. However, about three years ago, the sales price of the iPhone X was high, resulting in poor sales. The price of the 256G iPhone X even reached 10,000 yuan.

Influenced by this, Apple adopted cheaper components to reduce the price of iPhone. The cheapest version of iPhone 11 released last year was priced at only about 5,000 yuan, which caused a heated discussion. As a result, the proportion of components from Korean and Taiwanese manufacturers, which are constantly improving their technological strength, has increased, while the proportion of components from Japanese companies has declined.

Benefits and risks of electronic component manufacturers doing business with Apple

Mr. Imanaka believes that although the number of Japanese components used in Apple phones has decreased, it does not mean that the profits of Japanese electronic component companies have deteriorated.

The number of deliveries from suppliers to Apple is determined in an annual bidding process. Therefore, if a company does not have a high market share in the industry, even if it receives an order in one year, it is very likely that it will not receive an order in the next year.

When Apple's sales were sluggish, most Japanese electronic parts companies started doing business with Chinese mobile phone companies such as Xiaomi and OPPO. As the business of these Chinese mobile phone companies expanded, most Japanese suppliers began to pay less attention to Apple. Therefore, some Japanese suppliers only bid for a part of the parts, and some suppliers did not even plan to deliver large quantities to Apple from the beginning. Although they did not completely cut off ties with Apple (some Japanese suppliers still regard Apple as an important customer), the previous situation of relying solely on Apple as a customer no longer exists.

At the same time, some small and medium-sized enterprises that cannot withstand the "fluctuations" in delivery quantities dare not do business with Apple, which is not conducive to the development of these enterprises.

Apple's advantage in the smartphone market is not as strong as it once was. However, for electronic component manufacturers, transactions with Apple are still important.

As the price of Apple mobile phones has dropped, not every model of Apple mobile phone uses more of the world's highest-level components. However, Apple is trying its best to improve the performance of its products, so it is also trying to install high-performance components. In addition, some new components that other smartphone manufacturers cannot use can also be sold to Apple at a suitable price. Murata Manufacturing's Metro Circ, a flexible, ultra-thin substrate, is one of the representatives.

On the other hand, some Chinese smartphone manufacturers still admire Apple, which pursues cutting-edge technology and has a strong brand. The parts delivered to Apple are also considered to have a strong brand in the industry. Therefore, having business dealings with Apple can not only generate profits, but also facilitate the development of new customers. It is said that the new Apple 12 series is selling well, so it can be said that Apple still maintains its previous strength.

Therefore, although Japanese electronic component companies are no longer focused on Apple as a single customer as before, Apple is still a major customer for these Japanese suppliers.

There are also Japanese electronic parts companies whose cutting-edge technologies have won praise from Apple and have started business with Apple. In the future, Japanese electronic parts companies will need to hone their proud technological capabilities if they want to gain new business opportunities.

Source: Semiconductor Industry Observation compiled from " Biz-journal "

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