The practice, which appears to be within legal bounds due to the stipulations in Apple's supplier contracts, has led to significant distress and even bankruptcy for some of the initial developers of these technologies.
In 2024 alone, instances have emerged where Apple's approach to supplier relations has shown its downsides. Notably, Apple canceled contracts with two micro LED suppliers unexpectedly. One of these suppliers had invested a substantial $1.4 billion in constructing a factory tailored to Apple's requirements, only to find themselves without recourse when Apple pulled the plug.
According to a detailed report by The Information, Apple maintains stringent control over its suppliers' manufacturing processes, often securing co-ownership of the technologies developed. This control allows Apple to legally transfer manufacturing processes from one supplier to another, often choosing partners that offer lower production costs. This strategy, while legally sound, has left companies like GT Advanced Technologies in dire financial straits. GT Advanced went bankrupt after failing to meet Apple's increasing demands, a situation exacerbated when Apple took their developed technologies to cheaper suppliers like Hong Kong-based Biel Crystal and Lens Technology.
This pattern of behavior extends beyond individual companies to broader industrial implications. For instance, Apple has been instrumental in helping Chinese display manufacturer BOE match and compete with the quality of screens produced by South Korea's Samsung, leading to significant legal and competitive friction between these companies.
These strategies highlight a complex web of competitive practices and supplier relationships, raising questions about the ethical dimensions of such practices. Despite the legal framework allowing these actions, the impact on innovation, supplier stability, and industry competition remains a contentious issue.
The evolving landscape suggests that suppliers are becoming increasingly cautious in their dealings with Apple. For example, BOE has shown reluctance in committing to further investments without securing more favorable terms, reflecting a growing awareness and perhaps a pushback against Apple's dominant negotiating position.
As the tech giant continues to navigate its vast supplier network, the repercussions of its strategies are becoming more visible, sparking debates about the balance between corporate strategies and ethical responsibilities in the tech industry.
