
High-Tech manufacturing isn't worth much - Futurebot
https://www.bloomberg.com/view/articles/2016-08-12/high-tech-manufacturing-isn-t-worth-much
======
chillacy
I think you could also see it in light of competition driving profits down.
Manufacturing happens to be as much of a commodity as air travel and gas
(Apple has two different manufacturers for the processor in the 6s and
frequently switches suppliers for its other parts to ensure lower prices).

~~~
dilemma
>Manufacturing happens to be as much of a commodity as air travel and gas

For low tech manufacturing, yes. But for high tech there are not many
suppliers able to meet Apple's needs - how many fabs in the world could
produce the A10?

Also, even for commoditized products there are many things that can set a
manufacturer apart. Quality, timelines, service level (how easy are they to
work with; can they help with product development), logistics. These all lead
to a manufacturer being able to charge higher prices because they provide more
value.

~~~
chillacy
> how many fabs in the world could produce the A10?

As long as it's more than 1, there can be a bidding war. Sure, timelines and
service can be factors, but I suspect there's a minimum bar that has to be
met, and any additional service or convenience doesn't factor into the price.

Sounds like manufacturers are catching on though:
[http://www.bloomberg.com/news/articles/2011-11-03/apples-
sup...](http://www.bloomberg.com/news/articles/2011-11-03/apples-supply-chain-
secret-hoard-lasers)

> Not every supplier gives in. An executive who works with a major parts
> manufacturer says that Apple’s bargaining tactics tend to exert downward
> pressure on prices, leading to lower profits and margins. After months of
> negotiations, the company declined a $1 billion payment from Apple that
> would have required the supplier to commit much of its manufacturing
> capacity to Cupertino’s products. The executive familiar with these talks,
> who asked not to be named because the discussions were not public, says that
> while deals featuring $1 billion in cash up front are basically unheard of,
> his company didn’t want to be too dependent on Apple—and didn’t want to help
> it deflate prices.

