Luxshare Precision Industry is building a massive manufacturing complex in eastern China as it aims — with Apple’s blessing — to break the decadelong hold that Taiwanese rivals Foxconn and Pegatron have on iPhone assembly.
Lauly Li, Cheng Ting-Fang, and Shunsuke Tabeta for Nikkei Asia:
Luxshare, China’s most prominent player in the Apple supply chain, is building a 285,000 sq. meter manufacturing park in Kunshan, Jiangsu Province, with a total investment of 11 billion yuan ($1.72 billion). The sprawling site — covering an area the size of 40 football fields — will churn out millions of iPhones as early as next year.
In addition to the new complex, Luxshare has also leased and remodeled an adjacent facility that was previously owned by iPad assembler Compal Electronics, according to company filings and government environmental assessment papers seen by Nikkei Asia.
Luxshare is set to complete the first phase of its new complex around the middle of 2022, according to the construction floor plan and government documents obtained by Nikkei Asia.
Armed with the new facility, the Chinese supplier aims to significantly increase its share of iPhone assembly, from about 6.5 million units in 2021 to between 12 million and 15 million units by as early as next year, people briefed on the matter told Nikkei Asia. Luxshare currently builds iPhones in another facility in Kunshan that it bought from Taiwan’s Wistron in the summer of 2020.
Apple ships around 200 million iPhones a year, with Foxconn assembling nearly 60% of those and Pegatron around 30%.
MacDailyNews Take: The more suppliers and assemblers that exist to pit against each other in competition for Apple’s business, the better. That said, concentrating any part of Apple’s business in China, especially iPhone assembly, is a risk and makes Apple even more beholden to the whims and dictates of the Chinese Communist Party. But, hey, by the time that piper is to be paid, Tim Cook will likely be gone, so it’ll be the next CEO’s problem.
Please help support MacDailyNews. Click or tap here to support our independent tech blog. Thank you!
And the trillion dollar question is 🥁 🥁 🥁 🥁 🥁… why not the USA?…
The trillion dollar answer is $$$$$$$$$…. ’cause not many of us would be able to afford a US made iPhone (iPad, MacBook, charging wire, Apple Pencil cap, etc.).
Labor cost and regulatory cost would make these products significantly more expensive. Right or wrong, that’s the cold hard reality. Americans love a cheaper price. Corporations using cheaper manufacturing geographic areas is how we get what we love (again right or wrong — an argument can be made for each).
Ah yes, Tim CCPook. Slave labor is much cheaper than Union labor, which BeoG knows, too.
Odd as iphone production is moving out of china, the available assembling capacity is increasing in mexico, india, vietnam, why make more in china for?
That’s a fair point.
Ironically itsChina’s success that will one day see manufacturing ebb there. As their standard of living increases so does the cost to use it for manufacturing.
A geographic area must have a reliable electric grid, a reliable road and transportation system, sufficiently skilled available workforce, legal/social stability. China has been a standout in these areas but others well understand and are working to provide these basic infrastructure items to make the country attractive for these big corporate investments.
With that said, don’t forget that having manufacturing in a specific country can be payback. This isn’t limited to Apple or China. “You sell lots of products here and we don’t come down on you via regulation. So you will want to seriously consider employing/do X amount of business here”. Lately we’ve seen this with France, Russia, India in some form or fashion. Be sure that China is atop that list.
China has enough backwater areas of itself to exploit for many, many years. Imagine Mexico being part of the the USA… and that you still effectively had a border and a way to keep them down. Then, you would basically have China + Tibet + Inner Mongolia + East Turkistan/Xinjiang. These areas of China speak their own language and have their own culture.
Many of China’s minority groups don’t have the same opportunities as Han Chinese do and won’t have them for a LONG, LONG time.