How Luxshare went from minor manufacturer to major iPhone supplier
Luxshare's relationship with Apple has been fruitful and long-running, with incredibly humble beginnings. Here's how the founder went from assembly line worker to CEO of one of Apple's biggest manufacturing partners.
Apple's supply chain is broad, but dominated by a small number of major assembly partners. While Foxconn is the biggest one of the lot, a profile into Luxshare Precision shows what goes into making a competitor that handles a lot of Apple's orders.
Apple CEO Tim Cook paid a surprise visit to a Luxshare Apple Watch factory near Shanghai on Wednesday, according to the Wall Street Journal. The visit had Cook praise the company for making its products, including a conversation with chief Grace Wang, and positive comments about the factory's solar panels.
Cook's visit was a second to the company, as the initial one took place in 2017. At the time, Cook was happy with the company's "phenomenal precision and care," and the "culture of excellence" built by Wang.
The profile of Luxshare in the report explains the history of the company, with Wang an early employee of Foxconn who spent a decade at the assembler. She left in 1998 to make up a new factory producing electric cords, but took the lessons of Foxconn founder Terry Gou to heart.
Foxconn was an early client of Luxshare, being its biggest customer and providing half of the operating revenue from 2007 to 2010.
The Apple Connection
When Luxshare went public, it earned the nickname "octopus" by acquiring many companies, including a cable producer for the iPad. This led to more work producing cables and connectors, and a shift into adjacent areas like earphones and camera modules.
With a 2016 acquisition, Luxshare gained expertise to secure orders for AirPods from Apple. At the time, Apple sent engineers to help the company, and discovered that its production was able to make the AirPods with few lost to defects.
Wang also demonstrated knowledge of Apple products, including recitations about models of Macs and charging interfaces.
"Apple's stringent requirements have profoundly impacted Luxshare," Wang reportedly declared in the 2017 Cook visit. "Over the years, we have closely followed Apple, and this alignment has propelled Luxshare towards growth and prosperity."
With more acquisitions, Luxshare reached the higher levels of Apple's supplier list, with it also taking over iPhone manufacturing facilities in China from Wistron.
Luxshare has also enjoyed the benefits of other Apple suppliers, including Foxconn, becoming unhappy about low profit margins when working with Apple, as well as the required high levels of capital investment.
As issues occurred at Foxconn facilities in late 2022, Luxshare became an alternate route for production for Apple. For 2022, Luxshare's largest customer, believed to be Apple, was the source of more than 73% of the company's revenue.
Luxshare has already started working to diversify and avoid having too much revenue from one source client, by investing in new lines. It is working to acquire suppliers for electric vehicle producers, in a bid to expand more into car parts.
Meanwhile, it is continuing to enjoy its relationship with Apple. According to TF Securities analyst Ming-Chi Kuo, Luxshare is now handling "new product introduction" for the 2024 iPhones.
While still a Chinese company, Luxshare is also helping Apple diversify its production into other countries, including Vietnam and India. It's also preparing to assemble a future version of the Apple Vision Pro headset, which could launch in 2027.
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