Apple is reportedly giving key iPhone 16 production responsibilities to Luxshare, a move that could significantly boost the supply chain partner’s profit growth over the next two years, according to Apple analyst Ming-Chi Kuo. Kuo revealed in a recent Medium blog post that Apple has given Luxshare new product introduction (NPI) approval for next year’s iPhone 16 Pro Max, a significant win for the supplier. It is worth noting that Foxconn has consistently won the highest-end iPhone assembly NPI in previous years.
This decision by Apple follows its move to transfer some iPhone 14 Pro Max orders from Foxconn to Luxshare after 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. This indicates that Apple believes Luxshare’s R&D and production capabilities have reached the level of a first-tier supplier, according to Kuo.
Kuo 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 is set to 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 reports, Apple has instructed Foxconn, Pegatron, and Wistron, three of its biggest suppliers, to increase their capacity and manpower in the country.
As things currently 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).
Luxshare’s strong performance can be attributed to its investment in research and development, which has led to the development of a unique set of manufacturing capabilities. Its continued success in the iPhone business is indicative of its unwavering commitment to innovation and quality.
However, one potential area of concern for Luxshare is the geopolitical situation in the region, which could disrupt its supply chain and negatively impact production. Nevertheless, Luxshare’s strong performance despite this risk has highlighted the company’s resilience and adaptability.
In conclusion, Luxshare’s increasing involvement in the iPhone supply chain reflects Apple’s dedication to diversifying its supply chain and mitigating geopolitical risks. Moreover, Luxshare’s growth prospects underscore the importance of investment in R&D and innovation to stay competitive in the highly competitive electronics industry.
