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Taiwanese Apple suppliers may raise prices

updated 12:15 pm EST, Wed November 10, 2010

Currency shifts blamed

Apple suppliers based in Taiwan may be forced to raise their prices, says Bloomberg. The Taiwanese dollar has grown 2.5 percent against the US dollar during the last month, and by 7.2 percent during the last year. One supplier, Wintek, is estimating that a 1 percent increase in the exchange rate cuts 0.5 percent off its gross profit margin.

"A lot of the technology firms in Taiwan are export-oriented, so if the strong currency continues we might have to think about raising prices," says Wintek CFO Jay Huang. The executive suggests that if the Taiwanese dollar rises over $30 NT versus the US, the company "will be seriously hurt." Some 90 percent of its sales are claimed to be dependent on the relationship.

Largan Precision, which supplies camera lenses to Apple, could lose 2.3 percent from its net income this year with a 1 percent increase in the exchange rate. Apple's largest manufacturing partner, Hon Hai -- better known under the Foxconn brand -- would lose 0.7 percent under the same scenario, says a Yuanata Securities analyst.

Apple recently warned investors that its own gross margins could be hurt by component costs. At the same time, however, Largan CFO Charles Chiu observes that prices may not increase too much. "It'd be great if we could raise prices but it's difficult because of the competition," he remarks. "There's no doubt the appreciation of the Taiwan dollar is hurting the company's business."


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By Electronista Staff
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Comments

  1. pottymouth

    Forum Regular

    Joined: Nov 2003

    0

    Amateur econ...

    Definitely not my area of expertise, but If they had based prices on their own currency, wouldn't this be irrelevant? I can't help but wonder if they have historically done everything in USD because USD was stronger/more stable and now that it's changing they're trying to have it both ways.

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