Luxshare Precision Industry Co, a key partner of Apple in China is acquiring a major stake in an iPhone assembly plant currently operated by Taiwan’s Pegatron Corp. This $300 million deal positions Luxshare to become a more formidable player in the electronics manufacturing sector.
Luxshare will buy 62.5% of Pegatron’s unit in China
The deal involves Luxshare buying 62.5% of Pegatron’s unit in Kunshan, located in Jiangsu province, one of China’s most affluent regions. Pegatron, based in Taipei, is known for assembling iPhones at its Kunshan campus and another site in Shanghai. This strategic acquisition gives Luxshare a stronger foothold in competing with Foxconn Technology Group, Apple’s primary manufacturing partner and the world’s largest electronics contract manufacturer.
Foxconn, formally known as Hon Hai Precision Industry, is responsible for producing approximately 70% of all iPhones, primarily at its Zhengzhou site in Henan province. However, Luxshare’s growing presence within Apple’s supply chain cannot be overlooked. The company, also known as Luxshare-ICT, manufactures a variety of Apple products, including iPhones, iPods, Apple Watches, and the mixed-reality headset Vision Pro.
Apple’s CEO, Tim Cook, recently visited a Luxshare factory, commending the company’s efforts in supporting Apple’s environmental initiatives, particularly in reducing carbon emissions. This move by Apple to strengthen ties with Chinese suppliers like Luxshare highlights its strategy to its manufacturing base while also navigating the complex geopolitical landscape.
Shares in Luxshare saw a notable increase following the announcement of the deal, while Pegatron’s shares experienced a decline. Simultaneously, Apple is subtly adjusting its production strategy, reducing dependency on Taiwanese manufacturers amid growing tensions between Washington and Beijing. It’s simultaneously expanding its manufacturing footprint in India with the help of Foxconn and Pegatron. The upcoming times will definitely be interesting (and definitive) for the company, that’s for sure.
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(Via)
