Apple partner Luxshare set to gain control of key China iPhone plant

By Debby Wu

Apple Inc.’s key Chinese partner Luxshare Precision Industry Co. is set to gain control of an iPhone assembly site run by a Taiwanese rival, as the US tech firm fosters ties with China-based suppliers to improve relations with Beijing.
 

Luxshare is set to buy a 62.5% stake in Pegatron Corp.’s Kunshan unit in eastern China for about 2.1 billion yuan ($300 million), according to an exchange filing by the latter on Thursday. Taipei-based Pegatron currently assembles iPhones at its Kunshan campus and another site in Shanghai. 

The acquisition is expected to give Luxshare a better chance at competing with Taiwan’s Foxconn Technology Group, Apple’s primary manufacturing partner. Foxconn makes about 70% of all iPhones with the bulk assembled at its main site in central China. Luxshare did not respond to a request seeking comment. 

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

Apple has been cultivating Chinese suppliers including Luxshare, seeking to boost its standing in Beijing. The Cupertino, California-based company relies on the Greater China region for about 20% of its total sales, prompting Chief Executive Officer Tim Cook to say in March that the company’s relationship with the world’s second-largest economy is a symbiotic one.

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, 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 suppliers at the expense of Taiwanese ones, it is also shifting some production away from the region as tensions between Washington and Beijing persist. It is now relying on Foxconn and Pegatron to expand its manufacturing footprint in India.