Apple supplier Luxshare to take control of key iPhone plant in eastern China via US$300 million deal

Apple’s key Chinese manufacturing partner Luxshare Precision Industry Co is set to gain control of an iPhone assembly site run by a Taiwanese rival, as the US tech giant fosters ties with mainland China-based suppliers to improve relations with Beijing.Luxshare is set to buy a 62.5 per cent stake in Pegatron Corp’s unit in Kunshan, China’s most affluent county in eastern Jiangsu province, for about 2.1 billion yuan (US$300 million), according to an exchange filing by the Taiwanese firm on Thursday. Taipei-based Pegatron currently assembles iPhones at its Kunshan campus and another site in Shanghai.The acquisition is expected to give Luxshare, which is also known as Luxshare-ICT, a better chance at competing with Foxconn Technology Group, Apple’s primary contract manufacturing partner.

Luxshare did not respond to a request seeking comment.

Shares of Luxshare rose more than 4.5 per cent in early Friday trading in Shenzhen, while Pegatron shares fell as much as 4.4 per cent in Taipei. Hon Hai shares were little changed.

Apple has been cultivating Chinese suppliers, including Luxshare, to help boost its standing in Beijing.

Apple’s Cook ‘optimistic’ on China after record iPhone revenues

Luxshare’s prominence within the Apple supply chain has risen swiftly in recent years. It now makes a range of products for the US customer, including iPhones, iPod, Apple Watch and mixed-reality headset Vision Pro.

In October, Cook visited a Luxshare plant and praised the Chinese company’s commitment to help Apple reduce carbon emissions.

Yet as Apple cultivates mainland Chinese suppliers at the expense of Taiwanese contract manufacturers, it is also shifting some production away from the region amid tensions between Washington and Beijing. Apple is now relying on Foxconn and Pegatron to expand its manufacturing footprint in India.

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Aldo Pusey

Update: 2024-07-26

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