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Apple has reportedly enlisted China’s Luxshare to help develop its first-generation augmented reality (AR) devices. Marking the first time the tech giant has used a Chinese supplier for a first-generation product. Luxshare, which has rapidly risen to become one of China’s leading tech manufacturing companies, has taken over the AR development team in Shanghai, which was previously owned by Taiwan’s Pegatron. Here are the details…

Luxshare’s Rise Continues as Apple Taps the Chinese Supplier for AR Development

Luxshare’s participation is significant for Chinese tech suppliers, as in the past. Apple has relied on Taiwanese companies like Foxconn to help develop its new product lines. This move by Apple comes at a time of heightened tech tensions between the US and China and scrutiny of Apple’s supply chain in China.

Pegatron was the first supplier to help Apple develop AR devices, but collaboration on that front was on and off for four years. The company has been making Microsoft’s Hololens mixed-reality headset for years but became skeptical about Apple’s AR plans and gradually exited the project to focus on other applications such as automotive and servers.

Luxshare, however, is eager to secure as much business as possible from Apple and has already become the company’s most important China-based supplier, helping to build iPhones, the Apple Watch and AirPods. Foxconn is also involved in the AR project and will work on parallel development of a cheaper second-generation AR device.

Two of Apple’s most important suppliers, Taiwan Semiconductor Manufacturing Co. and Sony of Japan, have been chosen to develop micro OLED displays for the AR devices. Part of the development of these displays has taken place at Apple’s secretive campus in northern Taiwan. Each microdisplay costs $150, and an AR device requires a pair of such screens, making the display technology expensive.

Despite the cost of the display technologies and chips, Apple has high expectations for augmented reality and is tapping the full range of its supply chain to make its devices a success. Analysts and industry executives estimate that the retail price of Apple’s AR gadget could range from $3,000-$5,000, making the first generation of AR devices extremely expensive.

However, Apple hopes to push the price down in the second generation of devices to a more affordable price, like that of a high-end Mac computer. It hopes to attract a larger user base in doing so.

According to Chiu Shih-fang, a tech supply chain analyst with the Taiwan Institute of Economic Research, Luxshare’s involvement in the AR device development is a sign of the company’s growing importance to Apple. However, he adds that it does not necessarily mean Luxshare’s development capability is good enough to threaten Taiwanese suppliers. The success of Apple’s AR devices remains to be seen, especially given the uncertainties in the global economy and rising inflation.

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