What happens next?
Apple is extending its reach across a much broader market than ever before. It’s doing so through a highly focused strategy of vertical integration, expanding its space across the supply chain through a pricing push enabled by its strategic investments in proprietary component manufacturing innovation.
The company’s decision to focus on making its own high-value processors and other silicon chips inside its hardware has enabled it to scale down costs, letting it reach for mid-priced markets while still offering products worthy of its name. So, while competitors must feed an array of high-value component suppliers (as well as themselves), Apple feeds a smaller number of mouths, replacing some of the most valuable pieces with its own proprietary designs now made on its behalf by contract manufacturers.
This focus gives Apple far more business flexibility, particularly in current market conditions where component costs reach for the skies. Apple might have to pay more to its manufacturing partners, but other vendors must also pay more for those high-value chips.
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