On October 23, Beijing time, the Global Times reported that Foxconn, Apple’s main contract manufacturer, is currently under investigation by the mainland’s tax authorities and natural resources authorities. In fact, Apple has gradually reduced its dependence on Foxconn before this, and handed more orders to a mainland company: Luxshare Precision.

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Many Apple users may not know Luxshare or its chairman Wang Laichun, but they may have products made by the company. Luxshare, together with other Apple OEMs, produces AirPods headphones, Apple Watch watches and the recently released iPhone 15 mobile phones, including the highest-end iPhone Pro Max model. Moreover, Luxshare is also the assembler of VisionPro, Apple’s first mixed reality headset. Vision Pro is Apple’s next blockbuster product and will be available to consumers next year.

Last Wednesday, Cook made a surprise visit to Luxshare's Apple Watch production plant near Shanghai and praised Luxshare's work in making Apple's most advanced products. A video posted by Cook on Weibo showed him talking to Wang Laichun, smiling and nodding, and watching Luxshare's solar panels powering the factory.


Cook praised Luxshare on Weibo

"We have been working with Luxshare for more than ten years, and now they are producing some of our most advanced products, including the carbon-neutral Apple Watch series and iPhone 15 Pro Max. Moreover, Luxshare will achieve carbon neutrality in the production of Apple products by 2030. Thank you to Ms. Wang Laichun and her team for working with us to fulfill our commitment to protecting the earth," Cook said on Weibo.

In fact, as early as 2017, Cook had visited Luxshare’s AirPods factory in Kunshan. At that time, the cooperative relationship between the two parties was just beginning. At that time, Cook was full of praise for Luxshare's manufacturing process. "Their first-class factory integrates amazing craftsmanship and meticulous thought into the manufacturing of AirPods. Chairman Ms. Wang Laichun has created a people-oriented culture of excellence. We are very happy to cooperate with them!" Cook said.

The rise of Luxshare

Currently, most of Apple's mobile phones are still produced in mainland China. Although Apple has been trying to diversify its production, it is likely to take many years to achieve. One of the reasons is that mainland Chinese CEOs such as Wang Laichun are very good at meeting Apple's needs.

Speaking of Wang Laichun, she has a deep connection with Foxconn. In 1988, when Foxconn opened a factory in Shenzhen, Wang Laichun was one of the first workers hired. She started working in mechanical production such as manually inserting parts into circuit boards. She worked at Foxconn for 10 years and grew into a team leader.


Figure 3: Wang Laichun (right) and Cook

In 1998, Wang Laichun started his own business. Together with her brother, she opened a factory that produced products such as electrical wires and television casings. According to the memories of Luxshare employees, Wang Laichun admired Foxconn founder Terry Gou very much and liked to quote his words when talking to employees, especially in the early years. At the same time, Foxconn is also Luxshare's largest customer, and its position in the electronic product industry chain is one level higher than Luxshare's. Luxshare said in its prospectus when it went public in 2010 that about half of its operating revenue in the first three years came from Foxconn.

Shortly after the listing, Wang Laichun and her brother Wang Laisheng started an acquisition spree. Luxshare has been nicknamed the "Octopus" because of its steady expansion through mergers and acquisitions. One of its new acquisitions is the production of connecting cables for Apple's iPad.

Become associated with Apple

Luxshare said Wang Laichun once used her favorite motto to describe the relationship between Luxshare and Apple: "The one who flies with the phoenix must be a handsome bird."

After establishing the company's leadership in cables and connectors, Luxshare began to expand into adjacent products such as headphones and camera modules. In 2016, an acquisition gave Luxshare expertise in headphone production, helping it secure orders for AirPods. Apple's wireless headphones require complex manufacturing techniques to fit hundreds of components into a small space.



Apple sent engineers to help Luxshare produce headphones and found that this OEM could not only produce AirPods, but also had a high yield rate. Wang Laichun is proficient in Apple products and can easily tell the details of MacBook models and their charging interfaces.

"Apple's strict requirements have had a profound impact on Luxshare," Wang Laichun said during Cook's visit to the factory in 2017. "We have closely followed Apple's footsteps for many years, and this consistency has driven Luxshare's growth and prosperity."

Luxshare's rise to the ranks of Apple's top suppliers also benefited from another acquisition. In 2020, the company acquired the iPhone manufacturing plant in China from Taiwanese assembler Wistron.

Foxconn "falls out of favor"

For a long time, Foxconn’s Zhengzhou factory has dominated Apple’s iPhone assembly business, giving Zhengzhou the title of “iPhone City.” However, analysts pointed out that Luxshare has begun to take on Apple orders that Foxconn cannot fulfill, and is currently eating into Foxconn's Apple business share.

Sources familiar with the matter from Apple suppliers revealed that in the past few years, Apple’s Taiwanese suppliers, including Foxconn, have been dissatisfied with the low profit margins of Apple’s business and the huge capital investment required. From Apple's perspective, there are also risks in relying too much on one OEM.

As a result, Apple began to rely more on Luxshare. Luxshare's annual report shows that last year, the company's largest customer contributed more than 73% of its revenue. Luxshare did not clearly specify that its largest customer is Apple.

However, Luxshare's over-reliance on Apple has also caused some concerns among investors, because the company's profit margins in the assembly business are also very low. Last year, Luxshare’s net profit accounted for only about 4% of total revenue. Luxshare announced performance data late last week, saying third-quarter revenue fell 8.5% year-on-year, but profits increased. Luxshare's share price has fallen by nearly half from its peak three years ago.

Wang Laichun has said that Luxshare should not be too dependent on a few large customers and has begun acquiring and investing in suppliers to electric vehicle manufacturers. In August, she told investors that Luxshare aims to become one of the world's top auto parts suppliers working directly with well-known automakers.

Despite this, the relationship between Apple and Luxshare is getting closer. Ming-Chi Kuo, a well-known analyst at Tianfeng International Securities, said that Luxshare is handling what industry insiders call "new product introduction" (NPI) work for Apple's high-end iPhone launched in 2024. New product introduction refers to the process in which Apple works with its OEMs to transform product designs and prototypes into detailed manufacturing plans. Prior to this, new product introduction work was almost monopolized by Foxconn.

Moreover, Luxshare has also begun preparing to assemble Apple's next-generation virtual reality headset. Ming-Chi Kuo predicts that Apple’s new generation of headsets may be mass-produced in 2027.