According to Bloomberg’s report, Taiwanese company Wistron, previously one of Apple’s iPhone assembly suppliers in India, has agreed to sell its 100% stake in Wistron InfoComm Manufacturing (India) Private Ltd. to Tata Group for $125 million on October 27, 2023. Wistron will formally exit Apple’s supply chain, and Tata will become the first local iPhone assembly supplier in India.

TrendForce’s insights:

1. Apple Focuses on Indian Manufacturing as Wistron Exits iPhone Assembly Business

Amid international geopolitical risks, Apple has chosen to diversify its supply chain and production risks by shifting its iPhone assembly business from China to India. Apple’s decision to opt for India is primarily due to the fact that since 2015, India has become the fastest-growing regional market for smartphones globally.

Additionally, in recent years, the Indian government has actively worked to make India an attractive manufacturing and export hub for international companies. With strong government policy support and a vast domestic market, these factors have allured Apple to shift its production base here.

In the past, Wistron, along with Foxconn and Pegatron, was one of the three iPhone manufacturers for Apple in India. However, in 2020, there were reports of a riot at Wistron’s Indian factory, where thousands of Indian employees were dissatisfied with excessive working hours and unpaid wages. They vandalized the factory and even stole iPhones. This incident prompted Apple to initiate an investigation and ultimately led to a temporary suspension of its orders with Wistron.

Additionally, on July 17, 2020, Wistron announced the sale of its iPhone assembly plant located in Kunshan, China, to Luxshare Group. While this factory had an annual revenue that could exceed 100 billion yuan, its net profit margin was only 0.2%.

It can be inferred that the profit margins in the subcontracting business were inherently low, and following the riot incident at its Indian plant, Wistron may have lacked the bargaining leverage with Apple. Therefore, after considering all factors, it decided to sell its iPhone assembly plant in India.

2. Tata Group Takes Over India Manufacturing, But Expectations Are Low for a Significant Increase in Their Share of New iPhone Assembly

Currently, Wistron’s factory in Bengaluru is primarily responsible for assembling orders for the iPhone 14. To qualify for production subsidies from the Indian government, Wistron has committed to producing at least $1.8 billion (USD) worth of iPhones by March 2024.  After this transaction is completed, Tata Group will take over and fulfill this commitment.

Previously, Tata Group’s casing factory produced only one out of every two components that met Apple’s standards, indicating significant room for improvement in its yield rate. By examining the outsourcing production share table below, it is evident that Foxconn has the highest share in Apple’s current new iPhone assembly. Among these four models, only certain models like iPhone15 and iPhone15 plus are produced by Tata Group in India.

This suggests that Apple may be allocating the production of relatively less popular models to Tata Group for testing their yield rates. This decision may be due to the positioning of iPhone and Plus series products, coupled with their comparatively lower sales performance in recent generations. Apple is likely doing this until the production standards of the Indian outsourcing factory can be confirmed to meet 100% compliance.

Consequently, even though Tata Group’s acquisition of Wistron’s subcontracting factory is expected to expand its capacity, its share in new iPhone assembly is unlikely to significantly increase in the short term.

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• Tata Group to Become the Fourth iPhone Assembler as Production Relocation Accelerates

As reported by Jiwei, Beijing Xuanjie Technology Co., Ltd. has recently been established, and its legal representative is Xuezhong Zeng, who holds the position of Senior Vice President at Xiaomi Corporation. The company has registered capital amounting to 3 billion Yuan and is involved in activities related to IC design services and product sales, among other areas.

This marks the second “Xuanjie Technology” venture within the Xiaomi family. Back in December 2021, Shanghai Xuanjie Technology Co., Ltd. was established, also under the legal representation of Zeng. The company’s scope of operations encompasses technological services in the semiconductor field, integration of information systems, IC design and service related, and product sales. All of these are fully owned by X-Ring Limited.

Xiaomi, alongside OPPO and VIVO, among other Chinese smartphone brands, often find it challenging to independently develop advanced system on a chip (SoC) due to constraints in technical expertise and financial resources. Consequently, their primary focus on developing specialized chips like power management integrated circuits (PMICs) and Image Signal Processor (ISP), based on their collective experience in chip development.

Xiaomi stands out as the sole Chinese brand among these peers, having successfully launched its self-developed SoC in 2017, known as the “Surge S1,” which was integrated into the mid-range Xiaomi 5C. Nevertheless, the Xiaomi 5C fell short of expectations, mainly due to the absence of distinguishing features in the “Surge S1.” Many reviews highlighted subpar real-world performance of Xiaomi phones equipped with the S1 chip.

Subsequently, Xiaomi did not introduce a successor chip. In 2021, they introduced the ISP chip “Surge C1” and the charging chip “Surge P1.” In 2022, they rolled out the PMIC G1, emphasizing its significant potential in enhancing battery health, accurate battery life predictions, and overall smartphone battery performance.

Xiaomi’s President, Weibing Lu, has previously reaffirmed the company’s unwavering commitment to developing in-house chips. They fully acknowledge the long-term and intricate nature of chip development, respect the established development patterns in the industry, and remain prepared for a long-term strategy, all with the ultimate goal of enhancing the competitiveness and user experience of their end products.
(Image: Xiaomi)

According to IJIWEI’s report, industry insiders reveal that Huawei has set a goal of shipping 100 million smartphones next year. This target represents a 40% increase over earlier predictions, as various market research firms had previously estimated Huawei’s smartphone shipments for the next year to be around 70 million units.

Huawei’s aggressive sales plan for the upcoming year is propelled by the favorable reception of its recently launched flagship smartphone series, the Mate 60. By the end of this year, Huawei aims to have shipped approximately 20 million units of the Mate 60 series, contributing to the projected annual smartphone shipments ranging between 40 million and 50 million units. This surpasses the previous year’s shipments of 30 million units by 30 to 70%.

With the growing shipment volumes, the supply of Huawei Mate 60 series smartphones featuring organic light-emitting diode (OLED) panels has also seen an increase recently, with suppliers ramping up their production rates.

The Huawei Mate 60 series has become a much-anticipated success in the consumer electronics market. During the Huawei Autumn Full-Scene New Product Launch event, Huawei’s Terminal BG CEO and Chairman of the Intelligent Automotive Solution BU, Richard Yu, expressed his delight with the positive response to the “Pioneer Program” products.

Huawei is currently working around the clock to meet the surging demand for its products. The “Pioneer Program” includes the Mate 60 Pro, Mate 60 Pro+, and the foldable Mate X5.

Several supply chain sources and analysts have indicated that since earlier this year, Huawei has been steadily increasing its stock of components such as lenses, cameras, printed circuit boards, and various other parts to meet its shipment targets. Huawei has also requested that its sole 4G mobile chip supplier in the U.S., Qualcomm, deliver the full-year orders before June.

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• [News] Huawei’s Strategic Stockpiling: Aiming for 70 Million Smartphone Shipments

(Photo credit: Flickr)

SK hynix has introduced LPDDR5T (Low Power Double Data Rate 5 Turbo), a mobile DRAM with a remarkable 9.6Gbps speed. What sets this apart is its compatibility with Qualcomm’s new Snapdragon 8 Gen 3 Mobile Platform.

LPDDR5T features a 16GB-capacity version, delivering data processing speeds of 77GB per second while maintaining low power consumption. Its efficiency and speed are achieved through the incorporation of HKMG (High-K Metal Gate) technology, which reduces power usage and increases processing speed.

“Generative AI applications running on our new Snapdragon 8 Gen 3 enables exciting new use cases by executing LLMs and LVMs on device with minimal latency and at the lowest power,” said Ziad Asghar, Senior Vice President of Product Management at Qualcomm Technologies, Inc. “Our collaboration with SK hynix pairs the fastest mobile memory with our latest Snapdragon mobile platform and delivers amazing on-device, ultra-personalized AI experiences such as AI virtual assistants for smartphone users.”

“We are thrilled that we have met our customers’ needs for the ultra-high performance mobile DRAM with the provision of the LPDDR5T,” said Sungsoo Ryu, Head of DRAM Product Planning at SK hynix.

This collaboration between SK hynix and Qualcomm signals a new era for smartphones, aims to provide on-device, ultra-personalized AI experiences. As smartphones continue to evolve with enhanced DRAM for mobile, the partnership is set to strengthen and drive innovation in this space, positioning the devices as key vehicles for AI applications in the coming years.

(Image: SK hynix)

Major optical manufacturer, Largan Precision, held its online Q3 earnings conference on October 12, 2023. During the session, Chairman Lin En-ping’s responses to inquiries from analysts conveyed that the previously sluggish smartphone market might finally witness an upturn in Q4, as the iPhone 15 Pro Max’s robust pre-order performance surpassed market expectations. This bodes well for downstream customers’ willingness to procure lenses, and high-end lens demand is expected to rise.

TrendForce’s Insight:

1. Positive Signals Emerge from Largan Precision’s Statement

Since the beginning of 2023, the global smartphone market has been experiencing a general slump, influenced by factors such as China’s post-pandemic economic recovery falling short of expectations, rampant inflation, and uncertainty about economic prospects. Looking back at the previous Q1 and Q2 earnings conferences held by Largan Precision, Chairman Lin En-ping consistently displayed a relatively pessimistic outlook when addressing questions from financial analysts. This pessimism can be attributed to the subdued end-user demand, resulting in a natural decline in procurement momentum among downstream customers, which has made it challenging for Largan Precision to foresee clear future order demand.

However, with the arrival of Q4, the traditional peak season for smartphones, Chairman Lin En-ping provided a more positive response during the latest conference. This shift in stance can be attributed to the better-than-expected pre-order status of the high-end iPhone 15 Pro Max and the subsequent improvement in procurement momentum among downstream customers. Furthermore, there has been a resurgence in overall demand for high-end lenses. It is anticipated that the end demand for smartphones may improve in the upcoming Q4.

2. Increased Willingness for Lens Upgrades