Apple has reportedly advised its Chinese AirPods assembler Luxshare to make a major investment in Catcher Technology, a Taiwanese firm that makes the metal casing for iPhone and MacBooks.
According to sources who spoke to Nikkei Asian Review, Apple hopes the move will create a "formidable" alternative to its longtime supplier, Taiwan's Foxconn.
Luxshare-ICT, a fast-rising Chinese tech company known for its aggressive growth strategy, has been in talks with Catcher Technology, the world's second-largest metal casing provider, for more than a year and has recently entered a deeper round of negotiations, said one of the people who is familiar with the situation.
The deal, if realized, would give Luxshare the ability to produce high-quality metal casing as well as access to smartphone assembly know-how, which would take it a step closer to becoming the Chinese version of Foxconn -- a single company with operations that span nearly the entire electronics supply chain. Such a move could ultimately help Luxshare grab a share of iPhone production, which ships around 200 million units each year.
Apple is said to be keen to reduce its reliance on Foxconn, which has accounted for more than 50 percent of iPhone production since Apple launched the device in 2007. Diversifying the Cupertino giant's assembly supply chain would also make it less vulnerable to local economic instabilities and allow it to negotiate better prices with manufacturers.
Apple is continually seeking to broaden its supply options around the globe, and has even gone so far as to invest its own money in companies to keep them afloat. One recent example is its multi-million bailout provision for LCD panel maker Japan Display, which Apple wants to see become a future OLED panel supplier and thereby reduce its reliance on Samsung.
Whether Catcher goes through with any deal remains to be seen. While such a situation would be a win-win for Apple, the benefits to suppliers are less clear-cut as they are likely to shoulder more of the risk of such an investment if consumer demand sours amid the global economic downturn linked to the ongoing health crisis.
Top Rated Comments
Apple’s hypocrisy on human rights and democracy is getting sickening.
Edit: Responses have corrected me - Foxconn is Taiwanese, not Chinese. I guess that makes things even worse, as far as diversifying to be less reliant on China.
I think they had about 12 companies contracted out to do it (plus their own internal customer support—those were the employees treated nicely).
They had the companies fight over dog scraps. The company could lose the contract at a moment's notice, which we were constantly reminded of and did in fact happen at one of the companies I worked for (I did this as a gig at two different contractors). And actually I didn't even work for the contractor. I "provided work," meaning I worked for myself (same situation with Uber, etc).
Maybe Apple should use their money to build something, like have actual Apple-employed employees build actual physical objects (like manufacturing equipment and products), instead of lobbying Congress into letting them repatriate money they made overseas without paying full taxes on it or instead of all their share buybacks.