Status: 05.01.2023 10:44 a.m
According to a media report, Apple has commissioned the Chinese manufacturer Luxshare to produce premium iPhones. Unrest at partner Foxconn had led to production interruptions.
According to a newspaper report, the US company Apple wants to place a major order with the Chinese contract manufacturer Luxshare Precision for the production of the premium iPhone models. The newspaper “Financial Times” reported yesterday, citing people familiar with the matter.
Luxshare was already producing smaller batches of the iPhone 14 Pro Max at its Kunshan plant to make up for lost production at Foxconn’s Zhengzhou plant last year, it said. Apple and Luxshare did not immediately respond to Reuters requests for comment.
Loss of production ruins the balance sheet
The largest iPhone factory in the world is operated by Foxconn, currently Apple’s most important contract manufacturer. The Californian group’s decision is also a reaction to the unrest at the Taiwanese manufacturer. The plant in the central Chinese industrial metropolis of Zhengzhou was sealed off from the outside world at the end of last year due to the increasing number of corona infections. This led to unrest and protests by workers, and production was limited.
Around 200,000 workers are employed at the Zhengzhou site. Analysts had expected Apple to diversify its production amid outages in China due to employee unrest and coronavirus-related lockdowns. Quarterly losses at Apple are expected on the market due to the production interruptions.
Poor Foxconn record in December
At Foxconn, too, the production losses have ruined the balance sheet for December. Sales fell by 12.3 percent this month to the equivalent of 19.3 billion euros, said the world’s largest electronics contract manufacturer. In the fourth quarter, however, revenues increased by 3.5 percent. An increase of 10.5 percent was recorded for the year as a whole. Foxconn also announced this week that production at the Zhengzhou plant has restarted at 90 percent. Since the government in Beijing has now moved away from its “zero Covid policy”, the situation in Zhengzhou is “largely normal” again.
Stock market reacts positively
For Luxshare, getting into iPhone production could prove to be a gold mine. So far, Foxconn has dominated production in Apple’s supply chain. The Apple supplier produces almost 70 percent of all iPhones worldwide. Part of that pie could now go to Luxshare. Luxshare Precision boss Wang Laichun worked for Foxconn for ten years before leaving the company in 1999 and taking over Luxshare with her brother in 2004. Luxshare shares rose 3.6 percent on the Chinese stock exchange today.
Despite the new possible partner, Apple has been trying to become more independent of the production location in China for some time. Last September, the tech group announced that it would have the iPhone 14 manufactured in India. Analysts at JP Morgan believe India could make one in four iPhones by 2025. The logistics problems resulting from the strict corona lockdowns in China and the difficult relationship between the governments in Beijing and Washington are increasing the pressure on the group to organize its closely timed supply chains differently.
Dell does not use Chinese memory chips
Other US companies are also trying to diversify their supply chains. From 2024, Dell no longer wants to install memory chips made in China in its devices.
The computer maker has urged its suppliers to reduce the amount of Chinese-made components in its products amid concerns over tensions between the US and the Beijing government, the Japanese newspaper Nikkei reported today, citing those familiar with the matter People. Last year, the United States tightened its measures against Chinese high-tech companies to protect national security.