Apple increasingly chooses Chinese suppliers to cut costs

Although Apple has had Foxconn as its primary product assembly partner for years, a new report from The Information looks at the company’s new partnership with Chinese electronics manufacturers.

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The report explains that Apple has stepped up collaborations with Chinese partners, both to cut costs and to “gain Beijing’s favor.” The article clarifies that Foxconn, which is based in Taiwan, is set to be ousted as Apple’s main supplier by Luxshare, which is based in China:

“Luxshare has the potential to overthrow Foxconn as Apple’s main supplier. The Chinese company already surpasses Foxconn in terms of market capitalization, although Foxconn generated around $ 105 billion from Apple in 2020, more than 10 times Luxshare’s revenue. But in terms of valuation, Luxshare also outperformed Apple’s main subcontractors like Quanta Computer, Pegatron and Wistron, all based in Taiwan. Foxconn is increasingly concerned about Luxshare’s meteoric rise, including its much higher net profit margin, going so far as to form a task force to study the rival company. “

The report explains that Apple’s decision to shift more business to Chinese companies is part of Tim Cook’s alleged $ 275 billion deal with the Chinese government:

By shifting more business to Chinese companies, Tim Cook, Apple’s supply chain architect in China, fulfills his commitment with Beijing to expand its domestic tech industry, which will help the country reduce its dependence on companies headquartered outside the mainland, including Taiwan. A year after the signing of the economic agreement with China, Luxshare became the first Chinese company to obtain a final assembly contract for a major Apple product, the AirPods, thus ending the domination of Taiwanese companies. “

Apple’s measures could also win over more Chinese consumers, who have at times shied away from Apple in favor of local brands like Huawei based solely on nationalist choices.

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