Apple owns what companies

9 Major Companies Tied to the Apple Supply Chain

Apple (AAPL) is one of the most valuable companies in the U.S. with a market cap of over $1.3 trillion as of April 2020.   A big part of its success has come from its ability to be a true innovator in personal technology. Millions of customers are willing to pay top dollar for the quality, design, and features of Apple devices, making products like the iPhone, iPad, Mac, iPod, and Apple Watch top sellers.

To achieve this greatness though, Apple doesn’t depend on its own manufacturing alone. It has over 200 suppliers that it relies on for procuring components for assembly.

Key Takeaways

• Apple releases a supplier list annually.
• Apple has established high standards for managing supplier relationships.
• Apple’s 2019 suppliers list reports on 200 suppliers and shows over 800 production facilities.

Apple puts a great deal of effort into the monitoring of its suppliers. Relationships that help to make the tech giant a manager of one of the most efficient supply-chain management systems on the market right now. Each year it releases a progress report outlining its supplier relationship efforts as well as a list of its top 200 suppliers, which account for 98% of its procurement. Below discusses nine of the most prominent.

Taiwan

Taiwan is Apple’s number one supplier region, but this is somewhat of a smokescreen.

1 Hon Hai Precision Industry: Foxconn (HNHPF)

Hon Hai Foxconn is one of the major reasons that Taiwan is on the map for Apple. Foxconn is one of Apple’s oldest and largest suppliers. The company has its headquarters in Tucheng, New Taipei City.

However, while being based in Taiwan, Foxconn is often thought of as Apple’s largest China supplier because of its vast number of Chinese supplier locations. In 2018, Foxconn had 35 supplier locations servicing Apple from Taiwan, China, India, Brazil, Vietnam, and the United States, and 29 of its 35 locations are in China. Foxconn has also helped Apple to branch out to India with one location there. 

2 Wistron

Wistron is another Taiwan-based company that’s also helping Apple expand into India. Wistron has five supplier locations with three in China and two in India. A focus for Wistron in India has been printed circuit boards for iPhones.

3 Pegatron

Pegatron is another company rounding out the Taiwan lineup. It has its headquarters in Taiwan with only one Taiwan supplier location in Taoyuan. Pegatron’s other 17 locations include 12 sites in China along with sites in the Czech Republic, Singapore, Korea, Japan, and the United States. Pegatron is similar to Foxconn in that it provides iPhone assembly.

China

In general, China is a very important global region for Apple. The 2019 suppliers list shows Chinese and Hong Kong-based suppliers growing to account for a larger share than America and Japan, second only to the region of Taiwan. By physical location, China accounts for 380 of the total 809 production facilities.   However, Apple has shared some concern over its dependence on China given the 2020 Coronavirus outbreak as well as the Trump Administration’s new tariff rules.

4 Goertek

Goertek and Luxshare are two Chinese companies that have been in the Apple supplier spotlight. Both companies agreed to set up productions in Vietnam to improve the manufacturing cost efficiency of the Airpod. Goertek has three supplier locations, two in China and one in Vietnam. The company has its headquarters in Weifang, China.

5 Luxshare

Luxshare is also in partnership with Apple for the production of the Airpods. It has eight supplier locations with seven in China and one in Vietnam.

United States

Despite its reliance on an international supply chain, Apple is also still very dependent on many companies in the U.S., including 3M (MMM), Broadcom (AVGO), Qualcomm (QCOM), Intel (INTC), Jabil (JBL), On (ON), Micron (MU), and Texas Instruments (TXN). Other U.S. companies also include Finisar (FNSR), Qorvo (QRVO), Skyworks (SWKS), and Corning (GLW).

6 Qualcomm (QCOMM)

Qualcomm and Intel have made U.S. headlines over fierce legal actions. NASDAQ-listed Qualcomm is a world leader in semiconductor, mobile, and telecom products and services. It is known to supply multiple electronic components to Apple, including envelope power trackers, baseband processors, power management modules, and GSM/CDMA receivers and transceivers. These are various instruments used in device power management systems and in mobile signaling. Qualcomm has also come through for Apple devices, offering necessary modem technology.

Modem technology is however at the core of the Apple, Intel, and Qualcomm 504 disputes. Apple announced it was buying Intel’s smartphone modem business. This led to a lawsuit by Qualcomm which resulted in maintenance of the modem manufacturing relationship for Qualcomm even after the Intel acquisition.

7 Intel (INTC)

In July 2019, Apple announced its agreement with Intel to acquire the majority of its smartphone modem business. With the acquisition, Apple broadened its patent ownership and setup a strong plan for 5G development. Moreover, after the acquisition, the Mac now uses Intel processors. On the 2019 supplier list, Intel reports nine supplier locations, with three locations in the U.S. and others in China, Israel, Vietnam, Ireland, and Malaysia.

Other Countries

8 Murata Manufacturing Ltd. (MRAAY)

Murata is based in Kyoto, Japan. It supplies to Apple from 26 manufacturing facilities spread across Malaysia, Japan, Thailand, Vietnam, China, and Singapore. It has 16 supplier sites in Japan.

Apple and Samsung are Murata’s top two clients, procuring ceramic capacitors from the company. These electronic parts are used to control the flow of electricity in electronic devices.

9 Samsung

Samsung has its headquarters in South Korea. It supplies multiple components, including flash memory used for storing data content, the mobile DRAM used for multi-tasking various applications in devices, and the application processors responsible for controlling and keeping devices running.

Despite being a competitor to Apple in the mobile phone market, Samsung uses its supplier status to reduce its own component manufacturing costs via bulk production.

Supplier Relationships

Apple is known to maintain one of the best-managed supply-chains in the world. Using its stature and global reach, the tech giant is able to demand high-quality products and impose stricter terms on its suppliers. When one of Apple’s Chinese suppliers of «tactic engines» for the iPhone 7 proved unreliable, for example, the company quickly procured them from Japanese firm Nidec Corp.

Apple has hundreds of such suppliers willing to abide by the terms Apple sets forth. What’s more, by outsourcing its supply-chain and assembly operations, Apple can do what it does best—concentrate on designing great products that offer rich functionality and are easy-to-use.

On the flip side, being associated with a brand like Apple can be a remarkable boon for a supplier firm. Apart from the small novice firms, who may derive much of their business from Apple, even larger companies like Samsung use the relationship to their advantage. As noted, Samsung continues to compete with Apple in the mobile phone market; however, large orders from Apple allow Samsung to increase bulk production, which reduces manufacturing costs for its own mobile phone components.

Another advantage for suppliers is that Apple has a reputation for innovation. Regardless of how specific products have performed and despite missteps that have occurred, people expect Apple to come out with something new on a regular basis and eagerly anticipate these products. To a certain extent, this shields Apple suppliers, who will continue to see new demands for their goods and services.

It should be noted, however, that failing to please Apple can spell doomsday for a small or medium-sized supplier that has built its business around Apple product sales. If suppliers do not maintain high-quality goods at the right price, Apple has the positioning to replace them with another competitor.

The Bottom Line

Apple needs suppliers, and suppliers need Apple. It’s a streamlined relationship that is often mutually beneficial, though, at times, it can create tension. Suppliers have major exposure to Apple and its overall market performance. Financial reports of supplier companies are frequently used by market analysts to project sales for Apple products, and Investors also often look to Apple’s underlying suppliers for insights on Apple’s performance as well as more granular investment opportunities independently.

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6 Companies Owned by Apple

Audio products, voice-activated technology, hardware, and software

Apple Inc. (AAPL), one the world’s largest companies, has a market value of $2.4 trillion and in fiscal year 2020 posted net sales of $274.5 billion. Since its founding in 1976, the technology giant has grown into a diversified technology giant that sells devices such as iPhones, iPads, and Mac computers, as well as software and streaming services such as video games and Apple TV+. When it comes to acquisitions, Apple’s strategy has been to purchase small tech companies that it can easily integrate into its expanding line of products.

In 2020, Apple made a higher-than-usual number of acquisitions later in the year, including the popular weather app Dark Sky. In May 2020, the company also spent an estimated $100 million to purchase virtual reality streaming service NextVR.

The year 2021 has been marked by legal trouble that threatens the company’s apps ecosystem. Apple’s apps help drive the company’s services business, which generates $60 billion a year in revenue. Epic Games, maker of the popular video game Fortnite, sued Apple for alleged anticompetitive behavior related to its App Store. There has been no ruling on the case as of July 2021.

Below, we look in more detail at six of Apple’s most important acquisitions. The company does not provide a breakdown of how much profit or revenue each acquisition currently contributes.

Beats Electronics and Beats Music

• Type of business: Audio products
• Acquisition price: $3 billion
• Date purchased: Aug. 1, 2014

Apple’s largest acquisition to date is the $3 billion purchase in cash and stock of audio products maker Beats Electronics and its streaming service, Beats Music. Beats Electronics was founded in 2006 by music producer and rapper Dr. Dre and record executive Jimmy Iovine and released its first headphones in 2008. The acquisition has allowed Apple to sell the Beats line of headphones in its retail stores and with resellers. At the time of the acquisition, Beats was an independent company with minority stakeholders including Dr. Dre, Iovine, and private equity firm Carlyle Group.

Apple used several elements of Beats Music to help build its Apple Music streaming service. Beats Music was shut in 2015, and its subscribers were transferred to Apple. Apple has been aggressive about making Beats Electronics products a key part of the company’s offerings, including its Beats-branded headphones, earphones, and speakers.

Siri Inc.

• Type of business: Voice-activated personal assistant technology
• Acquisition price: Estimated at more than $200 million
• Date purchased: April 28, 2010

SRI International Artificial Intelligence Center originally developed Siri in conjunction with Nuance Communications, a company focused on speech technology. SRI International spun off Siri as an independent company in 2008. Early on, Siri was developed as an individual app to be used for everyday tasks like booking reservations at restaurants, getting weather reports, or buying tickets to a sports event. Apple integrated the voice-activated technology into its early iPhone models. Siri technology is now used on many Apple products, including the iPhone, Apple Watch, Mac PCs, and Apple TV. Siri reflects Apple’s strategy of acquiring a tech company for a specific technology, then integrating that technology into its existing products.

Shazam

• Type of business: Music identifier app
• Acquisition price: Estimated at $400 million
• Date purchased: Sept. 24, 2018

Founded as Shazam Entertainment Limited in 1999, Shazam is the company behind the namesake music identifier app. Apple completed its purchase of Shazam in 2018 for an estimated $400 million, with the goal of integrating the technology into iPhones and other smart devices.

Although Apple already had a music identifying system built into Siri, Shazam’s was regarded as more robust. The company announced that it would remove advertisements from all tiers of Shazam service, relying instead on revenue generated from song purchases made through the app.

NeXT Software

• Type of business: Hardware and software developer
• Acquisition price: $400 million
• Date purchased: Dec. 20, 1996

Founded in 1985 by Apple co-founder Steve Jobs during a period in which he had been forced out of Apple, NeXT developed hardware and software platforms. The company was perhaps best known for its NeXT computer, built for higher education and business use.

Apple announced the agreement to acquire NeXT in December 1996, which was followed by Jobs’ return to the company as CEO. For roughly two decades, NeXT remained the most expensive acquisition for Apple, but its technology played a key role in the development of Apple products.

AuthenTec

• Type of business: Computer security and touch control software
• Acquisition price: $356 million
• Date purchased: July 27, 2012

AuthenTec Inc. was founded in 1998 as a spin-off of Harris Corp. (then known as Harris Semiconductor). At the time of its acquisition by Apple in 2012, AuthenTec held roughly 200 patents in a multitude of computer and technology security applications and products. One of those turned out to be the most useful to Apple, and the one that the tech giant would integrate into a huge array of its devices: its biometric security tool.

That tool would later become Apple’s Touch ID. This technology now enables users to unlock iPhones and other devices with the touch of a finger. As with many other Apple acquisitions, AuthenTec’s products have been integrated in Apple’s existing offerings as added features.

Mobeewave

• Type of business: Payment services and software
• Acquisition price: Roughly $100 million
• Date purchased: July 2020

Mobeewave was founded in 2011 in Montreal. The software company developed a system utilizing near-field communication (NFC) technology to allow users to tap either a smartphone or a credit card to another smartphone to process a payment.

Apple’s acquisition price of about $100 million is relatively small compared with some of its major acquisitions. But Mobeewave’s technology could play an outsize role in future Apple financial products. In 2019, Apple already launched its own credit card, the Apple Card. And Mobeewave could place Apple more in direct competition with payment services companies like Square Inc. (SQ).

Apple Diversity & Inclusiveness Transparency

As part of our effort to improve the awareness of the importance of diversity in companies, we have highlighted the transparency of Apple’s commitment to diversity, inclusiveness, and social responsibility. The below chart illustrates how Apple reports the diversity of its management and workforce. This shows if Apple discloses data about the diversity of its board of directors, C-Suite, general management, and employees overall across a variety of markers. We have indicated that transparency with a ✔.

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