A new report claims that Apple is taking new technologies and processes developed by some of its suppliers and is handing that tech over to cheaper suppliers, often leaving the original, more expensive supplier dangling in the wind.
In 2024 alone there have reportedly been two instances of this, with Apple said to have abruptly canceled deals with two micro LED suppliers, including one supplier that had built a $1.4 billion factory to produce the parts.
According to The Information, the jilted firms have no legal recourse, as the cancellations were allowed in the contracts Apple and the firms had signed. The report says Apple’s supplier contracts give it, at the very least, co-ownership of the technology and processes, basically giving Apple total control over every step of the suppliers’ manufacturing processes.
This means that a firm can invest heavily in developing new technology or a new production process, and Apple is legally allowed to dump the firm and take the tech or process to another supplier, usually one that will work for less, as the cheaper firm was not required to invest in the new processes. The report says Apple does this by taking tech from US companies and handing it over to its Chinese suppliers.
Perhaps one of the best-known instances of this was the 2014 deal Apple had with Arizona-based GT Advanced Technologies for the firm to produce a scratch-resistant screen material for use in Apple’s devices. The supplier eventually filed for bankruptcy, owing nearly half a billion dollars. Apple’s increasing demands and its refusal to negotiate any terms are said to have led to GT’s bankruptcy.
Once GT Advanced Technologies declared bankruptcy, Apple took the material recipe developed by the firm and gave it to other suppliers, such as Hong Kong firm Biel Crystal. Former employees claim Apple also handed the technology over to a firm called Lens and has since played the two companies off of each other to get better pricing deals.
Apple is also believed to have spent several years aiding Chinese display manufacturer BOE in making displays that were competitive with those made by South Korea’s Samsung Display, which filed a suit against BOE in November 2023. However, the lawsuit may have been a retaliatory move to BOE’s accusations that Samsung stole its patents.
Apple’s practice of taking technology developed by higher-priced suppliers to hand it over to cheaper Chinese manufacturers is said to be a common practice, as some claim that Apple has passed on details of how Sony manufactures the displays in the Apple Vision Pro to China’s SeeYa Technologies. It should be noted that Sony has reportedly refused to up its production capacity for the Apple Vision Pro, so Apple could be looking for a secondary supplier to make up for Sony’s refusal to increase Vision Pro screen production.
While Apple’s passing on technology and processes to cheaper suppliers is perfectly legal, due to its contracts, the practice may eventually be a negative for the Cupertino company.
BOE has reportedly dragged its feet over making a commitment to invest funds in a new facility. BOE has also made a deal with India’s Samvardhana Motherson to make iPhone cover glass, and BOE has the option to buy up to 49% of the shares in that company. BOE has also reportedly been negotiating a rocky relationship with Apple due to unauthorized changes in its iPhone screen manufacturing process.
Apple has not yet commented on The Information’s report.