Apple wants to reduce its reliance on Foxconn to help Luxshare Precision become iPhone maker

Apple has advised China’s OEM Luxshare Precision, who makes  AirPods for apple, has made a major investment in the iPhone and MacBook metal case provider, hoping to use the move to create a strong alternative to Foxconn, another long-term supplier, several sources said.

Apple wants to reduce its reliance on Foxconn to help sophisticated iPhone makers

Lixun Precision

The talks between Luxshare Precision and The World’s Second Largest Metal Shell Provider, Catcher, have been going on for more than a year and have entered a more in-depth round of talks in the near future, the sources said. If the deal is made, it will give Luxshare Precision the ability to produce high-quality metal casings, acquire proprietary technology for smartphone assembly and move closer to becoming a mainland version of Foxconn. The move could eventually help Luxshare Precision get a portion of its iPhone production orders, which are shipped about 200 million units a year.

Since the iPhone was launched in 2007, Foxconn has accounted for more than 50 percent of the phone’s production orders. Apple is keen to reduce its heavy reliance on Foxconn, the sources said. “Apple encouraged Luxshare  to make this investment in order to balance Foxconn’s position as a mainland industry and commerce,” said one senior executive familiar with the matter. “

According to people familiar with the matter, the current negotiations between Luxshare Precision and Catcher Technology, which covers some of the factories, employees, managers and business opportunities that Could be built with Apple in the mainland, will be the largest investment in Luxshare Precision.

While not yet involved in the iPhone assembly business, the fast-growing Luxshare  Precision has become Foxconn’s biggest potential threat. As of Friday, the market capitalisation of Lixun Precision was close to Rmb254bn ($35.9bn), slightly higher than the T$1.06bn ($35.5bn) market capitalisation of HongHai, Foxconn’s parent company.

Apple and Lixun have yet to comment. Catcher said there were no specific plans to sell mainland assets or invest jointly with other companies.