Another Trade War Is Brewing and Apple’s Getting Worried: Here’s Why

5th Avenue Apple Store Credit: Apple
Text Size
- +

Apple is closely monitoring an ongoing trade dispute between Japan and South Korea because it could spell major trouble for its upcoming iPhones.

According to The Korea Herald, Apple and other tech firms have dispatched executives to South Korea to “gauge the fallout” of the trade war between the two countries, which may result in shortages of critical smartphone components. Here’s what’s going on.

Japan and South Korea Trade War

Earlier this year, Japan imposed new restrictions on South Korea technology companies in retaliation to a Korean court ruling. The court decision basically ruled that Japan-based Nippon Steel must pay for using forced Korean labor during the Second World War.

While the dispute between the two countries stretches back decades, the dustup has recently come to a head — resulting in Japan killing off existing free trade agreements with South Korea for chemicals important to the chip manufacturing process.

Essentially, this could create issues with the production of DRAM and NAND flash memory chips. It could also affect display production in South Korea.

As mentioned earlier, U.S. tech firms are now discussing the options and potential fallout with South Korean manufacturers, like Samsung, even as they renew supply contracts.

According to Business Korea, the U.S. government hopes that it can help the two countries come to a resolution. Unfortunately, that effort could be hampered by the fact that President Donald Trump has made recent statements that could threaten the U.S.’s neutrality in the matter.

How This Affects Apple

Samsung is the primary supplier of several critical components used in iPhones, such as flash memory and RAM chips, as well as OLED display panels. With a wrench in the chemical supply chain for those components, Apple and other tech firms that rely on Samsung could see major component shortages.

In other words, shortages of RAM and flash memory chips could cause delays or reduced supply for Apple. The situation may be especially worrisome for Apple as a new iPhone announcement event looms.

The situation between Japan and South Korea is only the latest example of recent trade wars that have forced manufacturers to rethink their supply chain options.

Apple, for its part, has long sought to reduce its dependence on single suppliers for critical components. This situation (and its potential consequences) perfectly illustrates why.

In fact, the Cupertino tech giant may even be looking into other options. According to industry insiders cited by DigiTimes, China-based display manufacturer BOE Technology could be a “strong contender” for Apple OLED display orders.

Past reports have suggested that Apple could tap LG (the primary supplier of the Apple Watch’s OLED display) for additional iPhone panels. But LG is also a South Korean company and its production could be affected by the trade dispute.

Apple is said to be especially concerned about the supply of RAM and flash chips. That could suggest that it doesn’t have another supplier lined up capable of making a suitable amount of chips in time for a new iPhone lineup.


Today's Deals
Social Sharing