Apple’s big supplier Foxconn faces China-based rival to make iPhones

Apple’s top iPhone maker has a major competitor on its heels — and it’s based in China.

Taiwan-based Foxconn — which has long been the go-to manufacturer for generations of iPhones — has set up a task force to fend off the growing threat from China’s Luxshare, according to a report.

Foxconn founder Terry Gou is personally spearheading the project, Reuters reported, as Luxshare is poised to become the first mainland China-headquartered company to assemble iPhones.

Gou’s task force is specifically looking into whether Luxshare — which was best known for making Apple’s AirPods and currently only brings in 5 percent of Foxconn’s revenue — is being boosted by the Chinese government.

While the US-China trade war and the coronavirus have intensified pressure on global supply chains, an increasingly acrimonious tech feud between the countries has also prompted Beijing to boost its tech sector — and Luxshare’s growth trajectory fits into that mould.

“Luxshare is set to rise,” one source with knowledge of the situation told Reuters, calling it “just a matter of how fast it could be.”

Luxshare in July acquired two smaller factories belonging to Taiwanese iPhone assembler Wistron in China. The deal could help Luxshare capture up to 30 percent of iPhone production within the next five years, according to Fubon Research.

One of the sources called it a “formidable opponent”, and said Foxconn has been conducting extensive research on Luxshare, aiming to “defeat it completely.”

Reuters also reported that Luxshare had been actively poaching from Foxconn. In one case, Luxshare offered $75,000 cash as a relocation subsidy for a senior Foxconn employee to move family from Taiwan to China.

David Collins, a manufacturing consultant based in Taipei and Kunshan, says that Chinese firms see a prime opportunity to attack.

“Foxconn’s share price is down roughly 50 percent from two years ago,” he said. “They see blood in the water.”

With Post wires.

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