Taiwan is still one of Apple Inc’s main supplying regions this year, but manufacturers in China are increasingly showing their teeth and may challenge Taiwanese makers in the US company’s global supply chain going forward, KGI Securities Co (凱基證券) said in a report yesterday.
According to Apple’s latest report of its 200 key suppliers around the world, US companies still top the list this year, with 58 firms, accounting for 29 percent of the total.
The US is followed by Taiwan, which has 47 companies registered in Apple’s supply chain this year, for a 24 percent share, while Japan takes third place with 46 firms and a share of 23 percent, according to tallies compiled by KGI.
However, China in fourth place has seen its number of Apple supply chain firms increase 35 percent to 27 this year from 20 in 2011, which is a bigger increase than the 30.6 percent rise in the number of Taiwanese suppliers over the same period — from 36 in 2011 to 47 this year.
“Market worries about Taiwanese firms’ ability to secure orders being eroded by Chinese firms may not be coming out of nowhere,” considering the fast increase in the number of Chinese suppliers in the last two years, KGI analysts Angela Hsiang (向子慧) and James Lin (林育弘) said in the report.
The report found that Chinese suppliers have started to gain orders and edge out their Taiwanese counterparts in the businesses of electrical connectors, battery packs and video-graphics-array (VGA) resolution lens modules as well as acoustic components and package materials.
However, the total number of Taiwanese suppliers is still ahead of the figures for Chinese companies in Apple’s supply chain. Moreover, Taiwanese makers still have the upper hand against their Chinese peers in fields such as printed circuit boards, camera lenses, backlight modules, thermal modules, flat panels, handset camera modules, casing, power supply units and final assembly services, the report showed.
As a result, the KGI analysts said the market might have overreacted to concerns about Taiwanese orders being substantially taken away by Chinese makers, citing the fact that Taiwanese companies generally have a higher-end product lineup than Chinese firms.
“Overall, Taiwanese firms in Apple’s supply chain still enjoy certain competitive advantages, especially those supported by advanced technology,” Hsiang and Lin said.
Among Taiwanese supply-chain companies, KGI particularly favors handset camera lens maker Largan Precision Co (大立光), Delta Electronics Inc (台達電) in power supply unit business, as well as metal casing suppliers Catcher Technology Co (可成) and Casetek Holdings Ltd (鎧勝), according to the report.