Foxconn set up a working group to “defeat” Luxshare Precision?

Latest update time：2020-10-27

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Reuters reported that Hon Hai Group, the parent company of Foxconn, Apple's largest iPhone contract manufacturer, has set up a working group to counter the growing influence of Luxshare Precision, another Apple contract manufacturer, which is seen as a serious threat to Foxconn's dominance.

The report also pointed out that the project was initiated by Terry Gou, the founder of Hon Hai Group. The working group was established last year and has been studying Luxshare's technology, expansion plans, recruitment strategies, etc. Although Luxshare's revenue of 62.5 billion yuan last year was only about 5% of Foxconn's, the company still attracted Foxconn's attention.

Foxconn Group responded to the Securities Times e-company reporter that the report was "false news." However, normally the manufacturer concerned would not admit such rumors.

In the past two years, Luxshare Precision has become an important member of Apple's supply chain after winning Apple's AirPods order, and the hot sales of AirPods have also brought a substantial increase in Luxshare Precision's revenue. In the field of Apple mobile phones, Luxshare Precision announced in July that Luxshare Precision and its controlling shareholder will invest 3.3 billion yuan to acquire 100% of the equity of Wistron Investment (Jiangsu) Co., Ltd. and Wistron Information Technology (Kunshan) Co., Ltd., which are wholly-owned subsidiaries directly and indirectly controlled by Wistron Information Technology. Among them, the listed company Luxshare Precision invested 600 million yuan in this acquisition.

Currently, Apple's contract manufacturers in China include Foxconn, Pegatron Technology, Wistron Group and BYD Electronics, among which Foxconn, Pegatron Technology and Wistron Group provide iPhone assembly contract manufacturing services to Apple, with Wistron Group being the smallest. Even though Luxshare Precision's acquisition target accounts for a small proportion of Apple's iPhone contract manufacturing business, it is of great significance, as it means that after the transaction is completed, Luxshare Precision will become Apple's first contract manufacturer in mainland China.

As of yesterday afternoon's close, Luxshare Precision closed up 1.32%, with a latest market value of 401.6 billion yuan, second only to Hikvision in the A-share electronic technology stocks. Foxconn's A-share listed company Industrial Internet of Things closed up 0.59% in the morning.

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