Apple has advised one of its Airpod factories in China to make a major investment in a key supplier as the company moves to create an alternative to its longtime Iphone assembler, Taiwanโs Foxconn, according to a Nikkei Asian Review report.
Why it matters:ย The deal would bring Luxshare-ICT, a lesser-known Chinese assembler of Appleโs Airpods, closer to producing Iphones, grabbing share from Foxconn.
- Hon Hai Precision Industry, known as Foxconn, is the worldโs largest electronics contract manufacturer and a major Iphone assembler.ย
Details:ย Luxshare has been in talks with Taiwanโs Catcher Technology, the worldโs second-largest metal casing provider, for more than a year and has recently entered a deeper round of negotiations, according to theย Nikkei report, citing a person familiar with the talks.
- The deal in question covers some of Catcherโs facilities in China, its workforce, and its business opportunities with Apple, the report said.
- The report cited anonymous sources as saying that Apple is keen to reduce its heavy reliance on Foxconn, which has accounted for more than 50% of iPhone production since 2007.
Context:ย Luxshare will help Apple produce 3 million to 4 million Airpod units in Vietnam in the second quarter as the California-based tech giant further diversifies its production out of China, according to anotherย Nikkeiย report published last week.
- Apple had previously asked suppliers toย assessย cost implications for shifting 15% to 30% of hardware production out of China at the peak of the trade conflict between the US and China last year.
- Foxconn recently moved some of its Iphone production lines out of China and has started toย produceย some Iphone XR units in India.
