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Rising star Luxshare secures major stake in Pegatron's iPhone factory

Tim Cook visiting a Luxshare factory

Apple supplier Luxshare is taking over an iPhone assembly factory from a rival manufacturer after buying a majority stake in the location.

Luxshare is buying a 62.5% stake in Pegatron's Kunshan factory in eastern China. The deal, worth approximately $300 million (2.1 billion yuan), was disclosed in a recent exchange filing. Pegatron, based in Taipei, currently assembles iPhones at its Kunshan campus and another site in Shanghai.

The supplier aims to give it a competitive edge against Taiwan's Foxconn Technology Group, Apple's primary manufacturing partner. Foxconn currently assembles about 70% of all iPhones, primarily in central China.

Luxshare's rise within Apple's supply chain is evident, as it produces a range of products for the company, including iPhones and Apple Watch, and is the sole manufacturer for the Apple Vision Pro headset. Additionally, Luxshare chair Wang Laichun said the company produces three of the four models of iPhone 15.

Apple has been actively fostering relationships with Chinese suppliers, including Luxshare, to strengthen its standing in Beijing, as reported by Bloomberg. The Greater China region accounts for approximately 20% of Apple's total sales.

While Apple deepens its ties with mainland suppliers, it's also shifting some production away from the region amid ongoing tensions between Washington and Beijing. The tech company is also relying on Foxconn and Pegatron to expand its manufacturing footprint in India, diversifying its production base.

Luxshare's acquisition of Pegatron's Kunshan unit not only affects the balance of power among Apple's Asian suppliers but also reflects geopolitical and economic considerations influencing the tech industry.