Apple supplier Luxshare will take over a rival iPhone assembly plant after buying a majority stake in the plant. Luxshare Precision acquired a 62.5% stake in Pegatron’s factory in Kunshan, eastern China. The deal is worth about $300 million (approximately 2.1 billion yuan), and the latest move was disclosed in a recent exchange filing. Taipei-based Pegatron currently assembles iPhones at its Kunshan factory and Shanghai factory.
The supplier aims to gain an edge in competition with Taiwan's Foxconn Technology Group, Apple's main production partner. Foxconn currently assembles about 70% of iPhones, with factories mainly concentrated in central China.
Luxshare Precision's rise in Apple's supply chain is obvious, as it produces a range of products for Apple, including iPhones and Apple Watches, and is the sole manufacturer of Apple's Vision Pro headset. In addition, Luxshare Precision Chairman Wang Laichun once said that the company produces three of the four iPhone 15 models.
According to Bloomberg, Apple has been actively promoting relationships with Chinese suppliers, including Luxshare Precision, to strengthen its regional market position in China. Greater China accounts for about 20% of Apple's total sales.
As Apple deepens relationships with Chinese suppliers, it also moves some production outside China amid tensions between Washington and the Chinese government. The technology company is also relying on Foxconn and Pegatron to expand its manufacturing footprint in India and diversify its manufacturing base.
Luxshare Precision's acquisition of Pegatron's Kunshan branch not only affects the balance of power among Apple's Asian suppliers, but also reflects the geopolitical and economic factors affecting the technology industry.