Luxshare is undoubtedly the most discussed Chinese manufacturer recently. In addition to announcing the purchase of Wistron’s Kunshan plant to produce iPhones, causing an uproar in the industry, Luxshare also frequently cooperates with Pegatron’s Kaisheng and case factory Kecheng to supply Apple. Chain big coffee appeared on the news page together.
“Luxshare is going to buy Kaisheng”, “Luxshare is going to cut into the chassis factory, and it will be possible to become a shareholder” and other messages have been circulating for a month. Although Pegatron announced on August 13 to merge Kaisheng, it was not originally expected by Lixun. Xunxun merged with Kaisheng, but whether or not to sell Kaisheng to Luxshare in the future still leaves room for the outside world to imagine. Although Kecheng did not sell the Chinese factory to Luxshare, it was also sold to the large Chinese company Lens.
Behind these news messages is actually a structural change in Apple’s supply chain that is quietly moving.
As an Apple supplier, it is no news that every move is restricted by Apple. Whether it is building factories, buying machines, production processes, yields, or even the financial information of the entire company, they must be checked and approved by Apple. Not to mention selling the factory. This time, Wistron sold the original iPhone production plant in Kunshan, China to Luxshare, and then Kecheng also announced the sale of the plant to Lens, which of course requires Apple’s approval.
And it is Apple that is leading this wave of supply chain restructuring.
Why did you choose to make a big move to restructure the supply chain at this point in time? On the one hand, of course, due to the slowdown in the growth of the smartphone market, coupled with the large number of Chinese brands in the middle and low-end competitors, Apple’s functional innovation in recent years has become more and more limited. In this case, Apple has turned to cost considerations. , the control of supply chain costs is becoming more and more stringent.
Observing suppliers in the mainland, because they enjoy local government subsidies, they have more price advantages than those in Taiwan. Supporting local manufacturers in mainland China to enter Apple’s supply chain, for Apple, in addition to making the supply more stable, it can also wield its bargaining knife.
However, in addition to cost considerations, the unpredictable Sino-US relations and the international situation may be the biggest consideration for Apple to move the supply chain.
The Sino-US trade war started in 2017 and has yet to see the dawn of an end. For manufacturers with production bases in China, whether to relocate the supply chain has been the biggest problem in the past two years. An industry insider said: “At the end of 2019, many Taiwanese manufacturers in the mainland region judged that the Sino-US trade war will continue to deteriorate, and they have internally decided to relocate their production lines, but in 2020 they put their plans on hold again.”
Compared with the undecidedness of many manufacturers to migrate production lines, Apple has obviously made a decision for its iPhone supply chain – to India.
▲ Distribution of iPhone global assembly bases
“Apple is actually trying to see if it can successfully move its supply chain to India,” industry analysts pointed out. Judging from the current iPhone supply chain, in the past, the iPhone assembly plants were two big and one small, that is, Hon Hai and Pegatron were the main ones, and Wistron was the secondary distribution. Most of the production bases are located in mainland China, including Hon Hai’s Shenzhen Longhua factory and Henan Zhengzhou factory, Pegatron has two factories in Shanghai and Kunshan, and Wistron’s Kunshan factory.
As the Sino-US trade confrontation intensifies, Apple is also worried about whether its market in China will be restricted because of this. After all, Apple’s revenue from China is as high as 20%. If the war accidentally sweeps it, the consequences will be disastrous. . Therefore, Apple moved to the idea of assembling and producing mobile phones in China by Chinese manufacturers and exporting them to various parts of the world, and planning to provide them with production bases in India.
In fact, Hon Hai and Wistron have already deployed in India ahead of time. Hon Hai has a factory in Chennai and Wistron has a factory in Bangalore. In the past, the two factories mainly assemble and produce old iPhones. This year, the Indian government has launched a new incentive plan of 50 billion Indian rupees, with the purpose of vigorously promoting “Made in India”. For Apple, the China-US trade war has led to the push of Chinese manufacturing, and India’s incentives to Indian manufacturing have come down one after another. Gradually expanding the volume of manufacturing in India and establishing a more complete supply chain has become Apple’s clear goal. .
Taiwanese manufacturers go from involuntarily to preemptive layout
As a result, Apple led Wistron to sell the plant to Luxshare, while Wistron, which has withdrawn from the mainland market, is expected to increase its capacity investment plan in India. According to previous Indian media reports, Wistron set up a third plant in India earlier this year. The factory, a few days ago, came out with a message of active recruitment.
And Hon Hai, which has been quite active in its global layout, was originally a pioneer in India. In addition to reports that the Chennai factory has already started production of the iPhone 11’s iconic models, there are also foreign media reports that Hon Hai expects to set up a new assembly plant in Sriperumbudur, southern India, intending to expand its presence in India. . Hon Hai’s advanced deployment in India has become a talisman now, because Luxshare, known as “Little Hon Hai”, is not only the founder of a former Hon Hai employee, but Luxshare’s goal is to target Hon Hai.
▲ The supply chain of the iPhone assembly plant has migrated to India, and the distribution of the three major factories
Of course, we can’t forget Pegatron, another important part of iPhone assembly. Whether Pegatron will eventually sell its lower case factory Kaisheng to Luxshare, it’s hard to say. But what is certain is that under the trend of this wave of supply chain migration, it is impossible for Pegatron to stay out of the way. The Indian media revealed Pegatron’s plan to set up a factory in India. Following Hon Hai and Wistron, Pegatron also followed On the Indian team.
Next stop, Vietnam?
Although it seems that Apple’s strategy of concentrating its supply chain in India is becoming more and more clear, the latest news from foreign media is that Apple plans to launch the Indian-made iPhone 12 by mid-2021. However, in the past, India has always had the disadvantage of insufficient infrastructure and very difficult personnel management. This time, Apple has relocated its supply chain to India. Can it really be successful? Even industry insiders say, “This is the trend, but I dare not say how long it will take for India to become the global iPhone production base.”
And everyone is also paying attention, besides India, what options does Apple have? Will Vietnam be an option? Judging from the fact that Apple AirPods was assembled in China in the past, and now it has also moved some assembly lines to Vietnam, and even Luxshare has reported that it may set up an iPhone assembly line in Vietnam, Vietnam may also be one of Apple’s pocket lists. No matter whether Indian production can be achieved or not, and where the next stop is, changes are inevitable, and the layout of manufacturers is keeping pace.