The next iPhone model will still be made in China by Foxconn, but the company that operates the world's largest iPhone factory in Zhengzhou will have to share the overall production with new suppliers, according to a Taiwan-based newspaper.
Economic Daily News reported that Taiwan-based Foxconn may lose some iPhone 15 assembly orders to Chinese manufacturers like Luxshare Precision after Foxconn's Zhengzhou plant failed to deliver iPhone 14s last November due to worker unrest and an exodus sparked by China's draconian Covid-19 controls.
Luxshare Precision, which was founded by a former Foxconn employee and has begun to assemble certain Apple products in recent years, is a major beneficiary for production of the iPhone 15 series, the Taiwanese paper reported. Luxshare has won orders to make three of the four iPhone 15 models for the California-based tech giant, including the entry-level version and premium models like the iPhone 15 Plus, according to the report, citing sources close to the suppliers.
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Apple is reportedly launching four models this year, including the iPhone 15, 15 Plus, 15 Pro and its priciest model - the 15 Pro Max or Ultra - which will be exclusively assembled by Foxconn.
It is the first time that Luxshare, which started out making cables for Apple and only began iPhone production in 2020 after it acquired two Chinese plants owned by Taiwan's Wistron, has been awarded manufacturing orders for three upcoming iPhone models in a given year. The move signals the mainland manufacturer's rising clout in Apple's China-based supply chain.
Pegatron, another mainstream Taiwanese manufacturer for Apple, which was the main supplier of the iPhone 14 Plus, will be responsible for a portion of the iPhone 15 Plus and 15 Pro models, the report added.
Foxconn and Luxshare did not immediately respond to requests for comment. Pegatron declined to comment.
Eddie Han, senior analyst at Taiwan-based consultancy Isaiah Research, said Pegatron may receive 20 to 25 per cent of orders for the iPhone 15 Pro, while Luxshare may win 20 to 30 per cent of iPhone 15 Pro Max production.
The arrangement marks the first time Apple has tapped three suppliers to produce its premium iPhone models, highlighting its efforts to mitigate potential supply chain disruptions by having backup suppliers. Analysts say the move could help other suppliers, including Luxshare, further erode Foxconn's share of the Apple value chain.
Han said Apple may have introduced a new rule for its supply chain to ensure that components and parts are provided by at least two suppliers to avoid potential risks associated with dependence on a single supplier.
Last November, a worker exodus triggered by China's stringent Covid controls and complaints over stipends upended Foxconn Zhengzhou, the world's largest iPhone factory, leading to shipment delays for the iPhone 14 and subsequently moves by Apple to lessen its manufacturing dependence on China.
Apple CEO Tim Cook (right) visits the Kunshan plant of Luxshare on December 4, 2017. Luxshare co-founder and chairwoman Grace Wang Laichun stands behind him. Photo: Handout alt=Apple CEO Tim Cook (right) visits the Kunshan plant of Luxshare on December 4, 2017. Luxshare co-founder and chairwoman Grace Wang Laichun stands behind him. Photo: Handout>
After the delays at Foxconn's Zhengzhou plant, Luxshare was called upon by Apple to fill part of the production needs for the iPhone 14 Pro, which laid the groundwork for the company to win more orders for the new iPhone models due for release later this year.
"Our research indicates that iPhone 15 series allocation may be similar to the allocation [that went to Luxshare] after Foxconn's pandemic [disruption] for the iPhone 14 series," Han said.
However, based on total volume, Foxconn will still produce the biggest quantity of the iPhone 15 series, the Economic Daily News report said.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
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