July 17—Apple vendors Luxshare Precision Industry Co. and Pegatron Corp. have recently taken steps that could shake up Apple’s supply chain. Luxshare paid Wistron Corp. a reported $472 million to acquire the latter’s only Chinese iPhone production facility. Pegatron will establish a factory in India, likely to assure its place on the Cupertino, California-based company’s good graces.
Luxshare Becomes an iPhone Assembler
According to Bloomberg, Luxshare is spending nearly half a billion dollars to expand its domestic manufacturing capacity. The Shenzhen-based concern’s deal with Wistron will see it acquire two of the Taiwanese company’s factories, including its lone Sino iPhone assembly center. The Chinese brand already has business ties to the Big Tech firm; it is the world’s largest producer of AirPods.
However, Luxshare’s new transaction will make it the fourth iPhone assembler alongside Wistron, Pegatron, and Foxconn.
On the one hand, the Sino firm’s acquisition will not geographically upend Apple’s existing supply chain or connect it to an unfamiliar vendor. But on the other, the Silicon Valley giant may decide to simplify as well as decentralize manufacturing partners list. Since the conglomerate has worked to diversify production beyond the mainland for years, Luxshare’s initiative might not pay off long-term.
Pegatron to Build New Indian Production Facility
Pegatron reportedly plans to build a new electronics production facility in India, likely to serve its main client, Apple, better. Bloomberg’s report of the matter does not directly state the new factory will produce iPhones. However, the Taiwanese firm derives over half its revenue from the conglomerate and is its second-largest handset manufacturer.
Analyst Matthew Kanterman explained that Pegatron building an Apple smartphone factory in India would help it maintain an even share of the iPhone SE market alongside Foxconn.
Reuters reported the Taiwanese manufacturing giant would spend $1 billion to expand one of its Indian plants earlier this week. The news agency suggested Foxconn made the move to accommodate Apple’s desire to shift production away from China. The iPhone maker asked its partners to relocate some of their manufacturing capacity last year amid rising Sino-American trade tension.
As the relationship between the two superpowers has worsened recently, Pegatron and Foxconn’s capacity expansions seem very wise. But mounting global commerce hostility makes the outcome of Luxshare’s purchase an open question.