Supplier Relationship -- Partners Or Enemies?

(9/27/2012) When the supplier relationship turns sour, the order cut from the dominant downstream customers' can be a trouble to the supplier. Recently, the smartphone lawsuit between  Samsung and Apple starts to dent the long term relationship between them (time of separation? well, that is impossible). Apple starts to cut nearly 50% of its LCD panel supply from Samsung. Apply turns its supply to LG and other Taiwanese suppliers. Luckily, compared to the $1B penalty of smartphone lawsuit loss, this is only a smaller dent to Samsung's revenue. Samsung is the world largest LCD panel manufacturer in 2011 and a leader in newest display technology. Even though Apple cuts its LCD panel supply from Samsung, Apple still heavily relies on Samsung to provide them flash memory chips (Samsung is also the world largest flash memory manufacturer), and processors. Apple and Samsung, partners or enemies? It will be both.

Well, from a long term perspective, Apple has to seriously consider the potential threat from its powerful competitor -- Samsung, and finds an alternative source for its critical components. Apple has a big ambition to launch Apple TV (rumored for a long time) and they cannot trust Samsung anymore. Under some under-the-table support (rumors), Foxconn (Apple's largest, and the world largest, contract manufacturer) has tried to invest the struggling Japanese LCD panel manufacturer -- Sharp. Different from Samsung that has its own brand consumer products, Foxconn is a "loyal" manufacturer for many PC and electronic product brands since Foxconn does not compete with their customers directly in the consumer market. Sharp has advanced display technology but is poorly managed in recent years. Foxconn's investment will help Apple to secure its future key component supply. At this moment (9/27/2012), this investment deal is stalled due to higher-then-expected loss in Sharp and disagreement of control power of Foxconn in Sharp's board (from several Taiwanese news reports without official's comments from Foxconn and Sharp). Let us wait and see how it will develop.

(10/22/2012) This is another interesting news. Amazon's cloud service is hit by real cloud (storms) in Virginia and many websites (Netflix, Pinterest, Instagram ...) are takend down. Do you see Netflix over there? You probably Amazon's video streaming is directly competing with Netflix, right? Let us see how long this business partnership will last.

(10/23/2012) The is a war between Amazon and top Brand suppliers. Top brand suppliers do not like to see their products priced lower than the lowest suggested retail price. Price competition among brand's distributors will undercut the brand's value and profit. However, on Amazon.com, there are many third-party sellers who are selling top brand products below he lowest suggested retail price. These 3P sellers can find the supply of top brand products from unknown sources and Amazon has a good reason not to interfere how these 3P sellers get their stock (that is one of reasons that many buyers go to Amazon to buy cheap brand products). The only weapon that the top brands can do is to cut the supply directly to Amazon (while they don't know to cut the supply for those 3P sellers on Amazon). So who will be the winner? Amazon? 3P sellers? or the top brands?

(3/19/2013) Amazon's sellers are furious for increasing fee for them to sell on Amazon. Will there be exodus of sellers on Amazon? Well it depends on how many other online marketplaces these sellers can switch and maintain enough successful sales if they choose to leave Amazon. This news shows a lot of details of Amazon's pricing schemes.

(3/22/2013) According to a Korean Publication, Apple will shift is LCD supply to two Taiwanese LCD panel manufacturers. These two tech big guys are drifting further away from each other.