Apple’s business practices with its suppliers have recently come under scrutiny. A report by The Information suggests that Apple has transferred technology from expensive suppliers to cheap suppliers and influenced its partners. According to the report, Apple’s contracts require the company to have complete control and co-ownership of every step in a supplier’s manufacturing process. This means that a company can invest in developing manufacturing techniques and Apple has the legal right to transfer that process to another company.
However, the report also reveals that these companies have no recourse against Apple, which can sometimes lead to the original supplier going bankrupt. This was evident in the case of GT Advanced Technologies, which partnered with Apple in 2014 to create scratch-resistant screen materials. When the supplier refused to renegotiate its contract, Apple canceled it, causing GT Advanced Technologies to file for bankruptcy. Apple then took the ingredients formula developed by GT Advanced Technologies and gave it to other suppliers.
The report also suggests that Apple shares detailed information about its technology with its suppliers, which allows them to compete for better prices. Apple has allegedly helped screen manufacturer BOE match the quality of screens produced by Samsung. However, Samsung filed a lawsuit against BOE in November 2023, accusing it of patent theft.
Apple’s business practices have also affected its microLED suppliers, with the company canceling contracts with two suppliers in 2024, causing one supplier to lose $1.4 billion invested in production facilities.
While Apple’s business practices are legal, they have caused some suppliers to hesitate in investing capital in new production facilities. Nonetheless, some suppliers, such as SeeYa Technologies, have benefited from Apple’s detailed information about how Sony produces screens for Vision Pro.
