Dell demands price cuts from upstream supply chain

Dell demands price cuts from upstream supply chain
Aaron Lee, Taipei; Joseph Tsai, DIGITIMES [Wednesday 13 March 2013]

Dell has reportedly been demanding its upstream component suppliers cut their prices to help reduce its costs. Metal chassis suppliers, which have a higher price level than most other components, are the US brand vendor’s first target, according to sources from the upstream supply chain.

In addition to asking its existing chassis suppliers, Catcher Technology and Fuyu Precision Component, a subsidiary of the Foxconn Group, to drop their prices, Dell also plans to invite Compal Precision Module, the joint-venture between Compal Electronics and Ju Teng, to become a major chassis supplier, creating pressure for its two partners, the sources noted.

However, the mentioned chassis makers have all declined to comment about their clients.

The sources pointed out that the strategy is usual for vendors that wish to negotiate for favorable terms, and Dell’s chassis orders are expected to be rearranged in April.

Since Dell’s privatization was meant to push its enterprise PC shipments, the sources believe the US brand vendor will only become more aggressive over demanding price cuts from its upstream suppliers.


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