China’s Luxshare expands Apple production capacity in deepening relationship

China’s Luxshare expands Apple production capacity in deepening relationship

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Apple supplier Luxshare is taking over an iPhone assembly factory from Taiwanese rival Pegatron, as the Chinese contract manufacturer deepens its relationship with the US technology giant. Luxshare, the second-largest iPhone manufacturer following Foxconn, will pay about $300mn to acquire a 62.5 per cent stake in a facility in Kunshan, a city north-west of Shanghai, according to a Pegatron filing on the Taipei Exchange. In Asia morning trading on Friday, Luxshare shares rose 4 per cent in Shenzhen while Pegatron’s shares dropped 4 per cent in Taipei.The deal is the latest example of how ties between Apple and China have, in some areas, strengthened in spite of growing geopolitical tension between Washington and Beijing. In recent years, Chinese-owned electronics contract manufacturers, including Luxshare, Goertek and Wingtech, have boosted their share of Apple business. Earlier this year, the Financial Times reported that Luxshare had clinched contracts for assembling premium iPhone models.Foxconn, Apple’s biggest supplier, has been under increasing pressure from Luxshare, its main Chinese rival, which is assembling a greater number of sophisticated devices. The Shenzhen-based company is the sole assembler of Apple’s Vision Pro mixed-reality headset.“Luxshare’s pricing is more aggressive. They manage their cost control better, making their quotes to Apple more competitive,” said Qi Yingnan, an analyst at Counterpoint Research. Earlier this month, Luxshare clinched a deal with US chip company Qorvo to buy assembly and testing operations owned by the group in Beijing and Dezhou, south of the capital. Citi analysts said the Qorvo acquisition would “increase Luxshare’s capabilities and talent pool”, opening the door to more US customers, in addition to the major Android smartphone makers it already supplies.RecommendedIn a statement Pegatron said: “There’s limited impact on the company’s overall operation since the current business model has no change due to the capital injection.”As Apple expands its relationship with some Chinese manufacturers, it is also working to diversify its supply chain outside the country. Earlier this month, the FT reported that Apple was pushing for batteries for its latest iPhones to be made in India. Foxconn is building up operations in the country, announcing earlier this month that it was spending $1.5bn on additional factory capacity. Chair Young Liu said in August that the company was going to invest “several billions of US dollars” in India. Additional reporting by Hudson Lockett in Hong Kong

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