It’s not good news for Foxconn: According to a report, Apple is about to have its premium iPhones built by one of the supplier’s major rivals in the future. In addition, the December balance sheet does not look good.
According to a media report, Apple will commission the Chinese contract manufacturer Luxshare to produce premium iPhone models. The US newspaper “Financial Times” reports, citing people familiar with the matter. Luxshare has already produced small batches of the iPhone 14 Pro Max at its Kunshan plant to compensate for production losses at Foxconn’s Zhengzhou plant last year, it said. Following the news, Luxshare’s shares rose 3.6 percent on the Chinese stock exchange. Neither Apple nor Luxshare have responded to Reuters requests for comment.
Foxconn is the world’s largest manufacturer of Apple iPhones. The plant in the central Chinese industrial metropolis of Zhengzhou had been sealed off from the outside world due to the increasing number of corona infections. This led to unrest and protests by workers, and production was limited. Analysts expected Apple to diversify its production amid outages in China due to employee unrest and coronavirus-related lockdowns.
As the “Financial Times” further reports, Luxshare has managed a real coup with the order. By producing smaller numbers of the iPhone Pro Max 14, the supplier has proven that it can also assemble the more complicated devices. Meanwhile, Foxconn has no bargaining power, Ivan Lam, an analyst at Counterpoint, told the Financial Times. “Accepting orders for high-end iPhones is a testament to the (Luxshare) assembly plant that could open their way to more diverse customers,” said Lam.
Meanwhile, Apple is getting closer to China with the decision, it said. Taiwanese partners such as Foxconn, which tried to reduce dependence on China with factories in India, Vietnam and the United States, suffered as a result. Meanwhile, Chinese companies Goertek and Wingtech, which assemble Airpods and Macbooks, would have benefited.
Foxconn is not doing well at the moment anyway. Recently it became known that production losses as a result of the rapidly increasing corona numbers in China had led to the Apple supplier’s balance sheet being shattered. Sales fell by 12.3 percent this month to the equivalent of 19.3 billion euros, said the world’s largest electronics contract manufacturer. In the fourth quarter, however, revenues increased by 3.5 percent. An increase of 10.5 percent was recorded for the year as a whole.
At the end of 2022, the Apple supplier from Taiwan, officially operating under the name Hon Hai, was struggling with the then strict pandemic restrictions in China. They angered workers and disrupted work at the world’s largest iPhone manufacturing plant in Zhengzhou, China. Insiders spoke of a drop in production of more than 30 percent. In the meantime, the government in Beijing has moved away from its “zero Covid policy”. The situation in Zhengzhou is “largely normal” again, Foxconn said without giving details.