To Reduce Dependence on Korean Suppliers

Apple has reportedly included China's YTMC in its list of NAND flash suppliers for the iPhone 14.

Apple has reportedly added China's YTMC to its list of NAND flash suppliers for the iPhone 14, which is to be unveiled on Sept. 7.

Apple has thus far received NAND flashes from Samsung Electronics, SK Hynix and Kioxia. For DRAMs, it has relied on Samsung Electronics and SK Hynix. Apple is highly dependent on Korea for DRAMs and NAND flashes, and was one of Samsung Electronics’ top five customers in the first half of this year.

Apple’s intention behind partnering with YTMC is to lower the prices of NAND flashes by diversifying its suppliers, industry observers say. On top of that, Apple needs to show a friendly gesture to the Chinese government to promote salesof its products in the Chinese market. The Chinese government holds a 24 percent stake in YTMC. In fact, YTMC is a state-run enterprise. According to Forbes, as of 2021, 51 Chinese companies were supplying parts to Apple. China overtook Taiwan to become the largest supplier for Apple.

In addition, Apple has once again selected China’s BOE as one of the display suppliers for the iPhone 14. The Chinese display maker has been supplying displays to Apple since the iPhone 12. However, Apple reportedly slashed BOE's display delivery for the iPhone 13 after discovering that the Chinese vendor arbitrarily changed the design of the display. Industry insiders predicted that BOE would be kicked out of Apple’s supply chain, but Apple seems to have judged that it needs BOE.

The reason Apple did not end its business with BOE is that it needs to lower its dependence on Samsung Display. Apple paid Samsung Display a yearly compensation of around one trillion won for three years from 2019 to 2021 because of its failure to purchase the contracted amount. It is unusual for Apple to pay compensations to its suppliers. This suggests that Apple is highly dependent on Samsung Display.

Apple has expanded the list of its suppliers by adding LG Display and BOE, but Samsung Display still hogs Apple’s display orders. All iPhone 14 Pro models are loaded with displays from Samsung Display. Some of LG Display and BOE displays went into iPhone 4 basic models.

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