South Korean Businesses Are Opposed to It Due to Demands of Supplies at Production Cost Level
Xiaomi is asking South Korean and foreign businesses that are related to parts for ‘Force-Touch’, which implements 3D touch, so that it can purchase them. However even parts businesses, which are planning on diversifying customers and sales, are opposite to Xiaomi due to a fact that it is demanding supplies at production cost level which will not leave much profit.
According to industries, Xiaomi is currently searching for subminiature linear vibration motor, actuator and other manufacturers so that it can manufacture similar modules to ‘Taptic Engine’ that provides sense of touch feedbacks to Force-Touch function.
Force-Touch, which had received popularity as Apple had applied it to iPhone 6S, new MacBook, and Apple Watch, is a 3D-touch interface that already has current 2D (flat surface)-touch function and additionally recognizes strength that is exerted when a finger is pressed on it. Taptic Engine that gives distinct sense of touch feedbacks when a touch panel is pressed and a force sensor that detects pressure limit are major parts.
Taptic Engine usually costs two to three times more than current vibration motor as it is an advanced from of Haptic Solution and linear vibration motor that provides vibration function to mobile equipment such as cellphones. While Apple was receiving related supplies from Japan’s Nidec and China’s ACC Technology, it has started to depend mostly on Nidec due to faulty problem from ACC Technology.
It is heard that Xiaomi had contacted huge South Korean partnering companies that had been verified of quality and deadline of delivery, and parts businesses that are focusing on entering Chinese markets and securing new customers are most of them. One executive from middle-sized parts business had said that Xiaomi had requested supplies of parts at production cost while advocating symbolism and marketing effect that will come along.
Parts businesses are however opposed to Xiaomi’s request. Not only Xiaomi is asking about vibration motor, it is also asking for variety of Smartphones’ modules, materials and parts on similar conditions. As it is already known that Xiaomi, which focuses on cheap Smartphone strategies, maximizes reduction of production cost even from steps of supplying parts, it will be disadvantageous for South Korean businesses when they negotiate price with current customers and new customers as well.
They had also considered other popular products such as batteries, wearable equipment, and vibration scooters other than Xiaomi’s Smartphones because they can increase profitability through sizeable economy even when profit per unit is low. However they believe that it will be difficult as of right now.
“Although it is always a welcoming thing to secure a new customer, we cannot view Xiaomi as a favorable customer to deal with.” said a person in this industry.
Staff Reporter Park, Jungeun | jepark@etnews.com