Apple supplier Luxshare Precision is building a massive manufacturing complex in eastern China to challenge Taiwanese rivals Foxconn and Pegatron and to strengthen its position in the Cupertino tech company’s supply chain.
China’s Luxshare is making an effort to expand in Apple’s supply chain
As reported by Nikkei, the company is building a 285-000-square-meter manufacturing facility in Kunshan City, China. The manufacturing site, covering an area the size of 40 football fields, could start producing iPhones as early as next year.
Luxshare has invested $1.73 billion into the project and it hopes to increase its volume of iPhone production from 6.5 million units to 12 million to 15 million units as soon as 2022. In addition to the new complex, the company has also leased and remodeled an adjacent facility that was previously owned by iPad assembler Compal Electronics.
Apple currently relies on Foxconn and Pegatron for the majority of its iPhone assembly. Out of the 200 million iPhones Apple ships annually, Foxconn assembles about 60% of the models, with Pegatron accounting for 30%. However, earlier this year, nearly one-third of companies Apple that added to its supply partners lists were located in China.
“I went on a business trip nearby and saw Luxshare’s new manufacturing complex. I am shocked by the scale of the complex and the possible capacity it could build for iPhones,” an Apple supplier executive told Nikkei Asia. “The day it threatens Foxconn and Pegatron might arrive earlier than people’s estimate judging from the progress of the new facility.”
An executive at another Apple supplier told the publication that although this has been the first year for Luxshare to build iPhones on its own, industry peers should not underestimate the company’s assembly performance.
The massive scale of the project is a sign of Apple’s growing reliance on Chinese suppliers – something the company has been criticized for. Several months ago, a group of U.S. lawmakers insisted that Apple exit the country due citing its compliance with the government’s authoritarian demands to remove apps from the Chinese App Store and staying silent on China’s human rights violations.
