Foxconn to Lose Top-Tier iPhone Assembly Allocation for First Time

[MacRumors]

In a blow to Foxconn, Apple is expected to hand key iPhone 16 production responsibilities to Luxshare, significantly boosting the supply chain partner's profit growth over the next two years, according to Apple analyst Ming-Chi Kuo.

In his latest Medium blog post, Kuo said Apple has already given Luxshare new product introduction (NPI) approval for next year's iPhone 16 Pro Max, which is a significant win for the supplier, given that Foxconn has consistently won the highest-end iPhone assembly NPI in previous years.

The approval followed Apple's decision to transfer some iPhone 14 Pro Max orders from Foxconn to Luxshare to diversify supply and mitigate risk, following the protests and riots that broke out in Foxconn's largest iPhone factory in Zhengzhou, China, in November 2022.

Luxshare's production yield improvement schedule for the iPhone 14 Pro Max subsequently proved better than expected, leading Apple to award NPI to the company for the 2024 model. That means Apple believes Luxshare's R&D and production capabilities have reached the level of a first-tier supplier, according to Kuo.

The analyst believes that Apple will now negotiate with the Indian government to help Luxshare set up production lines in India, with the possibility of floating the idea of a joint venture to offset concerns from investors about the geopolitical situation being unfavorable for the assembler.

Luxshare's iPhone business should see significant profit growth, says Kuo, with the company expected to ship 45–50 million iPhones in 2023, up from approximately 20 million in 2022, indicating Apple's increasing faith in and reliance on the assembler.

Apple wants to triple its iPhone production capacity in India within the next two years, as part of a larger plan to diversify its supply chain out of China and into other parts of the world. According to one report, Apple has instructed Foxconn, Pegatron, and Wistron, three of its biggest suppliers, to increase their capacity and manpower in the country.

As things stand, production allocation for next year's iPhone 16 series is allocated to Luxshare (iPhone 16 Pro Max), Foxconn (iPhone 16 and iPhone 16 Pro), and Pegatron (iPhone 16 Plus).

Article Link: Foxconn to Lose Top-Tier iPhone Assembly Allocation for First Time

 

[falkon-engine]

This is good news for India I hope good things come from this and that the Indian people are enriched and benefit.

 

[orbital~debris]

Ooh… bet some serious high-level meeting drama went down with this one!

 

[MrMacintoshIII]

This is good news for India I hope good things come from this and that the Indian people are enriched and benefit.

Oh man that was rich! Ahahahaha!

Oh wait you were serious! Let me laugh even harder!


BAHAHAHAHAHA!!! 🤣🤣🤣


Let me just ask you one thing now. Would you ever, ever want to work in one of these factories yourself?

What’s my point?
Let’s not pretend like this will be good for workers, when we’ve already seen how Foxconn ended up.

 

[Jackbequickly]

The less we depend on china the better as one day they will turn it all off!

 

[Jackbequickly]

Let’s not pretend like this will be good for workers, when we’ve already seen how Foxconn ended up.

‘What do you want? The chinese did put barriers up to make it harder for the workers to jump off balconies to their death! What do they want?

 

[ksec]

Foxconn is a Taiwanese Company Operating in China or India.
Luxshare is a Chinese Company. Whether it is operating in China or India.

 

[blaureiter]

In a blow to Foxconn, Apple is expected to hand key iPhone 16 production responsibilities to Luxshare, significantly boosting the supply chain partner's profit growth over the next two years, according to Apple analyst Ming-Chi Kuo.

In his latest Medium blog post, Kuo said Apple has already given Luxshare new product introduction (NPI) approval for next year's iPhone 16 Pro Max, which is a significant win for the supplier, given that Foxconn has consistently won the highest-end iPhone assembly NPI in previous years.

The approval followed Apple's decision to transfer some iPhone 14 Pro Max orders from Foxconn to Luxshare to diversify supply and mitigate risk, following the protests and riots that broke out in Foxconn's largest iPhone factory in Zhengzhou, China, in November 2022.

Luxshare's production yield improvement schedule for the iPhone 14 Pro Max subsequently proved better than expected, leading Apple to award NPI to the company for the 2024 model. That means Apple believes Luxshare's R&D and production capabilities have reached the level of a first-tier supplier, according to Kuo.

The analyst believes that Apple will now negotiate with the Indian government to help Luxshare set up production lines in India, with the possibility of floating the idea of a joint venture to offset concerns from investors about the geopolitical situation being unfavorable for the assembler.

Luxshare's iPhone business should see significant profit growth, says Kuo, with the company expected to ship 45–50 million iPhones in 2023, up from approximately 20 million in 2022, indicating Apple's increasing faith in and reliance on the assembler.

Apple wants to triple its iPhone production capacity in India within the next two years, as part of a larger plan to diversify its supply chain out of China and into other parts of the world. According to one report, Apple has instructed Foxconn, Pegatron, and Wistron, three of its biggest suppliers, to increase their capacity and manpower in the country.

As things stand, production allocation for next year's iPhone 16 series is allocated to Luxshare (iPhone 16 Pro Max), Foxconn (iPhone 16 and iPhone 16 Pro), and Pegatron (iPhone 16 Plus).

Article Link: Foxconn to Lose Top-Tier iPhone Assembly Allocation for First Time

Luxshare is still a Chinese company; so even if some assembly is in India, the money and business goes to China. They are based in Dongguan, China.

 

[Madhatter32]

Apple is finally thinking different.

 

[tridley68]

Give China the boot completely Apple

 

[MYZ]

What's left unsaid is that the complexity of final assembly has greatly been reduced over the years, due to the ever increasing amount of integration in the design, leaving much less room to negotiate for sizable profit margins.

So Foxconn likely couldn't put in a competitive bid for mainland assembly work due to increasing labor costs.

The interesting part is the increasing share of India in that final assembly, and why Foxconn's factories in India didn't win the business.

It seems like there are diseconomies of scale when all the component factories are too far for a business day trip, so that's one possible reason.

I'm also not sure what the breakeven point is to justify the hassle but I think the labor cost savings alone couldn't explain it. And the geopolitical reason is more likely to motivate moving to Vietnam. Most probably there are some generous subsidies by the Indian state governments to attract business.

Or perhaps more accurately that the various provincial governments in China stopped giving the previously more attractive subsidies.

 

[falkon-engine]

Oh man that was rich! Ahahahaha!

Oh wait you were serious! Let me laugh even harder!


BAHAHAHAHAHA!!! 🤣🤣🤣


Let me just ask you one thing now. Would you ever, ever want to work in one of these factories yourself?

What’s my point?
Let’s not pretend like this will be good for workers, when we’ve already seen how Foxconn ended up.

More than just Foxconn will be moving to India. More Jobs...

 

[toobravetosave]

I would much rather get phones from China over India

 

[MrRom92]

Good. Less reliance on China the better

 

[seek3r]

Oh man that was rich! Ahahahaha!

Oh wait you were serious! Let me laugh even harder!


BAHAHAHAHAHA!!! 🤣🤣🤣


Let me just ask you one thing now. Would you ever, ever want to work in one of these factories yourself?

What’s my point?
Let’s not pretend like this will be good for workers, when we’ve already seen how Foxconn ended up.

India has, at least on paper, a *bit* better labor laws for these kinda of factories. Enforcement is… lax and corrupt… but hopefully Apple will keep pressure on compliance to keep any disruptions to production away.

 

[CygnusTC]

Diversification is always good but still relying on China is not. Must find a way to get out of China. When the next world war happens China really has the US completely at their control. They shut down all exports and this country gets turned upside down. Covid was just a small preview of the supply chain dependent on China.

 

[seek3r]

Diversification is always good but still relying on China is not. Must find a way to get out of China. When the next world war happens China really has the US completely at their control. They shut down all exports and this country gets turned upside down. Covid was just a small preview of the supply chain dependent on China.

TBH if another WW happens I suspect that production infra worldwide wont survive well, I'm not sure humanity will. If nuclear powers start exchanging nukes we all lose.

What's more pressing is economic and global power issues.

China has an insane amount of leverage for a lot of problematic actions and positions based on their stranglehold on large chunks of global manufacturing and mining of resources - and one that ironically, despite the topic here being a US company, is larger over other countries (the US is still the second largest manufacturer in the world behind China, with our own sources of natural resources). They also have some significant and increasing possibilies for instability in a number of regions, there's been a lot of unrest they're bottling in.

Reducing dependence on China is probably a Good Thing (tm) for most companies that rely on manufacturing there right now.

 

[B4U]

Good. Less reliance on China the better

Luxshare - Wikipedia

en.wikipedia.org

You do realize Luxshare is a China-based company, right?

Foxconn - Wikipedia

en.wikipedia.org

Meanwhile, Foxconn is a Taiwan-based company.

 

[CubeHacker]

Diversification is always good but still relying on China is not. Must find a way to get out of China. When the next world war happens China really has the US completely at their control. They shut down all exports and this country gets turned upside down. Covid was just a small preview of the supply chain dependent on China.

Exactly! You would think we would learn our lesson after the fiasco just a few years ago. But nope. Investors always get their way. Profits above all else.

 

[0924487]

Foxconn is a Taiwanese Company Operating in China or India.
Luxshare is a Chinese Company. Whether it is operating in China or India.

It's where the company assembles the product that matters.

Say the US sanctions China mainland for all exports, and Luxshare is making iPhones in India, that wouldn't be sanctioned, but Foxconn operating in Zhengzhou would.

 

[svish]

Great to hear that Pro Max will probably be manufactured in India.

 

[justperry]

Luxshare is still a Chinese company; so even if some assembly is in India, the money and business goes to China. They are based in Dongguan, China.

AFAIK you can't be the sole owner of a business as a foreign entity, so, if that's the case (some) Indians will benefit.

 

[justperry]

Most probably there are some generous subsidies by the Indian state governments to attract business.

Or perhaps more accurately that the various provincial governments in China stopped giving the previously more attractive subsidies.

Nope and Nope

 

[winstein4000]

It is more complicated... The Foxconn majority owner was running for president in Taiwan on a pro-China platform. Apple and Foxconn are probably having a "transition" year to move the supply chain to India and other countries. Apple is also known to suck up to the Chinese CCP to operate in China. Apple is probably just taking its time to move away from China's exclusive supply chain.

 

[MYZ]

Nope and Nope

Can you link to a source?