Apple is reportedly pushing its Chinese AirPods assembler Luxshare to make a major investment in Catcher Technology. The Taiwan-based company makes the metal casing for iPhones and MacBooks.
Nikkei Asian Review reports that its sources say Apple is hoping the move would create a “formidable” alternative to its longtime assembly partner, Foxconn.
Luxshare-ICT, a fast-rising Chinese tech company known for its aggressive growth strategy, has been in talks with Catcher Technology, the world’s second-largest metal casing provider, for more than a year and has recently entered a deeper round of negotiations, said one of the people who is familiar with the situation.
The deal, if realized, would give Luxshare the ability to produce high-quality metal casing as well as access to smartphone assembly know-how, which would take it a step closer to becoming the Chinese version of Foxconn — a single company with operations that span nearly the entire electronics supply chain. Such a move could ultimately help Luxshare grab a share of iPhone production, which ships around 200 million units each year.
Apple is said to be looking for ways to reduce its reliance on Foxconn, which has assembled over 50% of all iPhones since the devices 2007 debut. Diversification would also make the Cupertino company less vulnerable to local economic instabilities as well as allowing it to negotiate lower prices with manufacturers.
“For Apple, it is a win-win situation to support the growth of Luxshare,” a supply chain manager said of the proposed Catcher deal. “Not only do Chinese companies offer lower prices with competitive quality, but it would also help Apple further deepen its network in a market with 1.3 billion people.”
Such deals are less of a win-win for suppliers, the manager added. “It will be a good deal for Apple, but most of the time suppliers have to shoulder the risks of the investment. Apple’s strategy is to see more competition in its supply chain so that it can have better components or better services, but still lower the cost.”
As of Friday, the market value of Luxshare, which listed in Shenzhen in 2010, was nearly 254 billion yuan ($35.9 billion), on par with Foxconn’s NT$1.06 trillion ($35.5 billion) market value.