Luxshare Precision's Kunshan iPhone assembly base is progressing rapidly

Luxshare Precision Industry Co. is building a massive production base in Kunshan as it aims to break the dominance of Taiwanese rivals Foxconn and Pegatron in the iPhone assembly market with the backing of Apple Inc.

With its facilities in eastern China, Luxshare Precision aims to assemble millions of iPhones as early as next year. (Image source: Nikkei Asia)

Luxshare Precision, China's most important player in Apple's supply chain, is building a 285,000 square meter production park in Kunshan with a total investment of 11 billion yuan (about 1.72 billion U.S. dollars), according to Nikkei Asian Review on December 22. The factory, which covers an area equivalent to 40 football fields, will produce millions of iPhones as early as next year.

The scale of the project not only shows Luxshare's ambitions, but also Apple's growing reliance on Chinese suppliers. In the long run, this trend may reshape the global technology supply chain. Multiple sources familiar with the matter said that another rising Chinese high-tech company, Wingtech Technology, recently entered Apple's supply chain and won orders to manufacture Mac mini and Apple TV. This year, Apple also added BOE Technology to its list of high-end display suppliers for its new iPhone.

In addition to the new complex, Luxshare is leasing and renovating an adjacent facility formerly owned by iPad assembler Compal Electronics, according to company filings and government environmental assessment documents reviewed by Nikkei Asia.

Luxshare will complete the first phase of its new complex around mid-2022, according to construction plans and government documents obtained by Nikkei Asia.

People familiar with the matter told Nikkei Asia that Luxshare aims to significantly increase its share of iPhone assembly from about 6.5 million units in 2021 to 12 million to 15 million units as early as next year. Luxshare currently manufactures iPhones at another plant in Kunshan, which it purchased from Taiwan's Wistron in the summer of 2020.

Apple ships about 200 million iPhones each year, of which Foxconn assembles nearly 60% and Pegatron assembles about 30%.

"I was on a business trip nearby and saw Luxshare Precision's new production base. I was shocked by the scale of the complex and the capacity it could potentially build for the iPhone," an Apple supplier executive told Nikkei Asia. "Judging from the progress of the new facility, the day it threatens Foxconn and Pegatron may come sooner than people estimate."

An executive at another Apple supplier said that although this year is the first year that Luxshare Precision officially independently manufactures new iPhones, the company's assembly performance rate has improved faster than expected and industry peers should not underestimate it.

Luxshare and the Kunshan municipal government held a groundbreaking ceremony in late October. Now, cranes and excavators are moving in and out of the construction site all day long. Several workers on site told Nikkei Asia that thousands of workers have been recruited to speed up construction.