Luxshare, Apple's key assembler of AirPods, is reportedly attempting to break into iPhone manufacturing ahead of schedule, a move backed by Apple and aimed at challenging Taiwanese rival Foxconn's dominance in the iPhone supply chain.
Earlier this year, analyst Ming-Chi Kuo mentioned the possibility of Luxshare pushing into the iPhone assembly business, starting with small-scale production of older iPhones and Apple Watch models. However, Nikkei today cites multiple sources claiming that Luxshare is already studying production of the new iPhone 12 mini at a Chinese plant that it is in the process of buying from Wistron.
The plant is in charge of roughly 20% of total orders for the iPhone 12 mini, two people with direct knowledge of the matter said.
"Luxshare is working with Wistron in making the latest iPhone 12 mini in Kunshan. [But] its pace for reaching a satisfactory production performance is slow. There's still a lot of room for Luxshare to learn," an executive-level source familiar with the situation said.
The move is said to be unusual because the purchase of the plant is not final, and Apple doesn't normally allow outside employees to visit suppliers' manufacturing sites, especially during the height of iPhone production season.
Luxshare bought Wistron's iPhone assembly plant in Kunshan, China, for $499 million in July to shore up its manufacturing links with Apple. Wistron has been an iPhone manufacturer itself since 2015, with plants in China and India, and Apple reportedly asked Wistron to share some of its iPhone production expertise with Luxshare as part of the deal.
Kuo previously said he believes Luxshare Precision will become a key iPhone case component supplier by the second half of 2021. The company is said to have a unique vertical integration advantage because it also provides many iPhone parts and accessories to Apple.
In related news reported earlier this week, Apple has suspended its partnership with Chinese-based Pegatron after it discovered that the major iPhone supplier was committing labor violations at a student workers' program. While Pegatron's current iPhone business is not expected to be affected, Bloomberg reported that it could lose some iPhone 12 orders to Luxshare next year.
