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MegaTech Biz: Apple Locking Out Competition via Time Travel

A recent anonymous Quora post speculated that Apple is using its cash hoard to make strategic investments in manufacturing of specific components. We know that this is certainly plausible as DigiTimes had previously reported on Apple purchasing 200-300 very expensive glass cutting machines, prompting rumors of curved glass screens for iPhone 5. In extreme cases such as with PA Semi, the company originally supplying Apple’s ARM processor design, the company was bought and merged outright.

Apple is constantly surveying new technologies that will serve their designs. Having cash to make investments on new factories or manufacturing equipment gives Apple a lot of leverage with their sub-contract vendors. It also gives Apple the opportunity to develop new vendor relationships from an advantageous position.

In return for these investments, Apple may be requiring vendors to guarantee two things. First, Apple may be requiring vendors to supply new parts exclusively for Apple use for a period of 6-36 months. This could explain why Apple seems to always have tech available that can’t be bought or duplicated elsewhere by their competitors.

Second, once the technology exclusivity period lapses, Apple may be requiring the vendors to give them very special pricing relative to the vendors’ price to other customers. In this case, Apple maintains a pricing advantage compared with competitors using the same components in their own products. Certainly, these strategies had been publicly addressed before by Apple’s COO Tim Cook.

Given these conditions, Apple maintains tight control over their supply chain making it nearly impossible for competition to keep up. It just goes to show you what a little bit of smart investing can do, and in Apple’s case is even bending the space-time continuum.


Source: Gizmodo, DigiTimes, Daring Fireball

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