The total fortune of China's 100 richest tycoons ranked by Forbes magazine shrank by 7 percent in 2012 from a year earlier, but Pan Zhengmin, co-founder of Shenzhen-based AAC Technologies Holdings Inc, was an exception to the downward trend.

The 42-year-old entrepreneur returned to this year's top 100 list and ranks 35th with a net worth of 13.2 billion yuan ($2.1 billion), almost doubling his fortune of 6.9 billion yuan a year before.

Pan's fast-expanding fortune has been boosted by a nearly 70 percent year-on-year surge in the share price of his Hong Kong-listed company, which makes micro-acoustic components and supplies big clients such as Apple Inc.

With the launch of the iPhone 5 in September and an expected launch of the iPad Mini later this month, a large number of component and assembly suppliers are relying on Apple's influence to boost their revenues and stock prices.

Share a small slice

In January, Apple published for the first time a list of its 156 major suppliers, which account for 97 percent of the company's procurement expenditure.

There are eight mainland companies on the list, including AAC Technologies, Suzhou Anjie Technology Co and battery maker BYD Co.

"There are also many secondary suppliers that are not on the list, who provide parts to Apple's listed suppliers," Zhu Jizhi, vice president of cogobuy.com, a leading online retailer of electronic components in China, told the Global Times.

Mainland companies such as Shandong-based acoustic component maker GoerTek Electronics Co and Shenzhen Desay Battery Technology Co have been widely identified by market consultancies as component suppliers for Apple.

Zhu estimated that around 5 million workers in the mainland are working directly or indirectly on the manufacturing of Apple's gadgets.

For the iPhone, 58.5 percent of its retail price goes to Apple as profit, while suppliers in South Korea and the US get 4.7 percent and 2.4 percent of the price respectively.

Chinese companies only get 1.8 percent of the price, Huatai United Securities Co said in a research note published in January.

"Most mainland companies just assemble Apple's products or supply non-core components, so their profit margins are not as high as their US or South Korean counterparts, who supply chips or touchscreens," Zhu said.

Labor costs in China have risen this year and have squeezed assembly suppliers' margins. On August 1, Taiwan's Hon Hai Precision Industry Co, parent company of Apple's biggest assembler Foxconn, raised basic monthly salaries by 16 percent to 1,800 yuan for its workers in Zhengzhou and Chengdu.

To deal with the rising costs, Apple's suppliers in Taiwan led by Hon Hai and Cheng Uei Precision Industry Co are considering raising assembly service charges or components prices by 5-10 percent, Taiwan-based Economic Daily News reported on October 15. Questions sent to Apple to confirm the issue went unanswered by press time.

Though Foxconn's business model is controversial, following a spate of suicides among workers and a series of labor disputes, some mainland suppliers operate in a similar fashion.

"I toured around a GoerTek plant in Shandong Province last month and found it has adopted a similar model to Foxconn," an industry analyst surnamed Chen at a domestic securities company told the Global Times.

"There are about 40,000 workers at the plant. Many of them work up to 12 hours a day and their salary is around 3,000 yuan per month," he said. "Some workers complained that they are so tired after finishing work by midnight."

A staff member at GoerTek's investor relations department declined to comment on their business with Apple, citing an agreement on privacy.

Stock market gains

Once tagged as an Apple supplier, some listed companies have gained a lot from the stock market.

For instance, shares in Apple's mainland suppliers Anjie Technology and Desay Battery have surged by 86 percent and 74 percent respectively on the Shenzhen Stock Exchange since the beginning of this year.

"Being an Apple supplier means the company's technology or quality has been recognized by the tech-savvy giant and that the supplier is seen as a leading player in a certain field," Zhu said.

"Investors prefer their stocks because these suppliers represent the trend of China's industrial upgrade toward high-end manufacturing," he noted.

Some analysts expect mainland manufacturers will get a further boost from the launch of the iPad Mini, which is expected to happen tomorrow.

"Apple might set low prices for iPad Mini products to increase its competitiveness against rivals, so the company is likely to purchase more low-price components from mainland suppliers," Xu Zhanjie, an analyst at Xiangcai Securities Co, said in a research note.

Challenges remain

Apple suppliers still face challenges, such as being dropped if they fail to meet Apple's standards, as well as uncertainties over Apple's business prospects.

The stock price of California-based chip maker Audience Inc plunged by 63 percent on September 7, after it implied in a statement on September 6 that the iPhone 5 was not going to adopt its technology.

"For a component, Apple always chooses two to three suppliers. If a supplier's technology or manufacturing quality fails to meet Apple's standards, it is unlikely they will get the order," Zhu said.

Desay Battery, which posted a 20.4 percent year-on-year increase in net profit in the first half of 2012, highlighted in the interim financial statement that its main risks lie in dependence on a single client in the smartphone sector for revenue generation. 

For Apple, managing a large number of suppliers is also a problem.

Some mainland contract manufacturers have been found to be selling products - originally intended for Apple but that failed to meet the firm's quality standards - to third-party companies.

On April 6, officials in Shenzhen found more than 100,000 iPhone screens worth 32 million yuan in a local warehouse, the General Administration of Quality Supervision, Inspection and Quarantine said in a statement last month. 

These screens made by two subsidiaries of South Korea's LG Electronics in Nanjing and Yantai should have been destroyed due to quality problems. But they were sold to a third-party company in Shenzhen, which provides unlicensed screen replacement services to iPhone users, the statement said.