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“All Components Face Price Pressure” – Apple Forces Suppliers To Accept Price Cuts, As JPM Cuts Production Estimates

zerohedge.com / by Tyler Durden / Sep 1, 2016 10:35 AM

In the latest confirmation that the long-awaited rebound in demand for AAPL products keeps getting delayed, even as a surge in low-priced Chinese competition continues to steal market share, overnight the WSJ reported that the tech giant is forcing its suppliers to accept both price cuts and volume reductions in order to preserve profit margins: “as Apple Inc. grapples with falling iPhone sales this year, it is pushing to cut better deals for parts with its suppliers, while carriers in the crucial China market have mobilized to push iPhone sales with deep discounts. In recent months, Apple suppliers say the Cupertino, Calif., company has told them to accept price cuts for parts destined for the next-generation iPhone while cutting forecasts for order volume. This is likely to hurt some suppliers’ earnings in the second half of the year.”

And while AAPL is preparing to wage tax battle in Europe, it is engaged in a far more critical for its future profitability war in China, where in the past two weeks, China Telecom has started selling unlocked 16-gigabyte iPhone 6s models for 4,288 yuan (US$642), based on checks at its retail outlets, the WSJ reports. That is below a price of 5,288 yuan listed on Apple’s China website. Rival carriers China Mobile and China Unicom Corp. have also offered fresh iPhone discounts, although they aren’t as steep as China Telecom’s. In the U.S., major telecommunications operators sell the unlocked 16-gigabyte iPhone 6s for US$649.

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