The life of an Apple supplier is getting even tougher – Chicago Tribune

Imagination Technologies Group discovered how fickle life can be as an Apple supplier when it was ditched this month by the iPhone maker. More suppliers may suffer the same fate as the world’s largest technology company faces a shrinking number of semiconductor makers and expands into areas that need special chips designed in-house.

Dialog Semiconductor, Synaptics and Cirrus Logic are particularly vulnerable to Apple’s supply chain whims and demands, according to analysts. One component supplier, Avnet Inc., stopped working with Apple because the relationship was squeezing its profit margins too much.

Apple has developed its own processors for years, but has stepped up in-house design of components, including graphics, Bluetooth and other smartphone-related chips, in recent years. That’s expensive, and creates new risks, but it helps the company maintain leverage over suppliers as a recent wave of acquisitions cut the number of chipmakers it works with.

To secure cheaper prices, Apple likes to have at least two suppliers for any given component. But last year alone, one in five U.S. chipmakers were acquired, according to Susquehanna Financial Group. Key Apple suppliers SanDisk Corp., Broadcom, TriQuint Semiconductor, Intersil Corp., Sharp Corp., Elpida Memory Inc., RF Micro Devices Inc. and Fairchild Semiconductor International have all been snapped up since 2013.

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