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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 will pay about $300mn to acquire a 62.5 per cent stake in a facility in Kunshan, a city of 1.6mn people 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 despite growing geopolitical tension between Washington and Beijing.
In recent years, Chinese-owned electronics contract manufacturers, including Luxshare as well as 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 sole assembler of Apple’s Vision Pro mixed-reality headset.
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 at the time the Qorvo acquisition would “increase Luxshare’s capabilities and talent pool”, opening the door for more US customers in addition to the major Android smartphone makers it already supplies.
Even 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 generation of iPhones to be made in India.
Foxconn is building up its operations in the country, announcing earlier this month that it is spending $1.5bn on additional factory capacity. Chair Young Liu said in August that the company is going to invest “several billions of US dollars” in India.
Additional reporting by Hudson Lockett in Hong Kong and Nian Liu in Beijing
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