Chinese iPhone assembly contractor Luxshare Precision is set to officially acquire the controlling stake of Pegaglobe (Kunshan), the iPhone assembly plant under Pegatron. This series of acquisitions will provide Luxshare with a stronger competitive advantage against Foxconn. Concurrently, Luxshare is reinforcing its component layout to enhance its capability to expand iPhone orders.

Following the acquisition of Wistron’s Jiangsu and Kunshan plant, Luxshare has now secured the controlling stake of Pegaglobe (Kunshan), a subsidiary of Pegatron. This marks another acquisition of China’s plants involved in manufacturing iPhone for Taiwanese companies.

According to UDN citing from industry insiders,  Luxshare’s acquisition of Pegaglobe (Kunshan) is likely to have received Apple’s approval. Luxshare has consecutively broken the pattern of iPhones being solely manufactured by Taiwanese companies, suggesting that Luxshare has the opportunity to reshape the landscape of iPhone manufacturing in the future.

Having acquired iPhone manufacturing plants in China from Wistron and Pegatron, Luxshare not only gains more market share in manufacturing but also expands its presence in the upstream iPhone component supply chain. This ongoing integration of upstream components enhances Luxshare’s capability to secure more iPhone orders.

In the past three years, Luxshare has been consistently acquiring iPhone-related supply chain entities. In July 2020, Luxshare’s subsidiary, Lizhen Precision (Jiangsu), acquired Wistron Investment (Jiangsu) and Wistron InfoComm Manufacturing (Kunshan) for RMB 3.3 billion (approximately USD 467 million), marking the beginning of Luxshare’s acquisition of plants involved in iPhones assembly for Taiwanese companies.

Recently, Luxshare finalized an agreement with the global provider of connectivity and power solutions – Qorvo. Luxshare will acquire Qorvo’s testing and packaging facilities in Beijing and Dezhou, with the transaction expected to be completed in the first half of next year. This move is seen as Luxshare’s effort to build a more comprehensive iPhone component supply chain.

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• [News] Apple Supplier Qorvo Sells Chinese Test and Packaging Plant to Luxshare
• [News] Tata Group Plans to Build New iPhone Assembly Plant in India, Aligning with Apple’s Localization Strategy for the Supply Chain

(Photo credit: Luxshare)

According to South Korean electronics industry media “The Elec,” insiders have revealed that, in the year-end organizational restructuring, Samsung Display has strengthened its existing team responsible for handling demand from Cupertino, where the corporate headquarters of Apple is located.

Reportedly, the focus was on enhancing its capability to respond to the potential release of foldable devices by Apple. This suggests that an Apple foldable device might make its debut in the coming year.

The report points out that both Samsung Display and its competitor LG Display are developing a 20.25-inch foldable display for Apple’s future products. Samsung Display’s organizational restructuring appears to be a strategic move to compete more effectively against other rivals, particularly LG Display, in an effort to secure orders for Apple’s foldable panels.

Apple is Samsung Display’s most significant customer for OLED panels, and Samsung Display is the exclusive supplier of foldable OLED panels for its parent company, Samsung Electronics. Samsung Display evidently aims to leverage the experience gained in producing foldable displays for Samsung devices to prepare for potential future orders for foldable iPhones and iPads from Apple.

However, according to the analysis released by TrendForce in the second half of this year, Apple’s development in the folding field still requires time. Apple’s foray into foldables has been tepid, to say the least.

Yet, Apple’s unwavering obsession with user experience could be the culprit. Furthermore, persistent challenges with foldable tech—think panel evenness and hinge design—might be holding them back.

But here’s the kicker: Achieving perfection with larger foldable panels is somewhat simpler than their smaller counterparts. Could this mean Apple might leapfrog right into medium-sized foldable products—like laptops or tablets? Only time will tell.

TrendForce’s insights reveal that by 2023, shipments of foldable smartphones could skyrocket to an impressive 18.3 million units, marking a 43% YoY surge. However, this only captures a slim 1.6% of the year’s total smartphone market.

Fast forward to 2024, and we’re looking at another leap—a 38% growth, translating to a hefty 25.2 million units and nudging the market share up to 2.2% Looking at the medium to long term, TrendForce believes the expansion of the foldable smartphone market is inevitable. By 2027, shipments could soar to a whopping 70 million units, seizing around 5% of the global smartphone market.

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• Foldable Smartphone Market Penetration Estimated at 1.6% in 2023, with Potential to Exceed 5% by 2027, Says TrendForce

(Photo credit: Apple)

According to a news report from Financial Times, Apple has reportedly informed its supply chain, including battery suppliers such as China’s Desay Corporation and Taiwan’s Simplo Technology, of its inclination to shift the battery supply for the iPhone 16 to India. Apple is encouraging suppliers to relocate existing production capacity to India to expand production scale in the region.

TrendForce believes that, given the critical nature of battery components in terms of user safety, any error in battery assembly is unacceptable. As Apple’s certainty about production yields in India remains unclear, this move carries certain risks.

Apple Expedites iPhone Assembly Business Transfer to India to Mitigate Geopolitical Risks

As the world’s most valuable company, Apple’s supply chain strategy has always been a key factor in its success. Amidst geopolitical tensions between the U.S. and China, Apple faces significant pressure from both the investment community and U.S. policymakers to diversify its supply chain, prompting an acceleration in the transfer of iPhone assembly operations.

In recent years, Apple has been shifting part of its iPhone assembly business from China to India to mitigate production risks.

The choice of India as a manufacturing destination is influenced not only by its large and untapped population but also by proactive subsidy policies implemented by the Indian government, aiming to position India as an attractive manufacturing and export hub for multinational companies.

Additionally, the growth potential of the iPhone in the Indian market adds to the appeal of relocating iPhone production to India. 

Increased Risks as Battery Component Production Shifts to India amid Uncertain Yield Rates

Analyzing the manufacturing distribution for Apple’s iPhone 15 series in 2023 reveals Foxconn’s predominant role, with only specific Plus models being produced by India’s Tata Group.

This strategic move, based on TrendForce’s insight, is inferred to be influenced by the Plus models’ lower sales performance in previous generations and their specific product positioning. Apple seems cautious about shifting production to India entirely until the production standards of Indian manufacturing facilities are confirmed, especially for models with comparatively lower demand.

In the ever-evolving landscape of smartphone components, such as core processors and camera modules, upgrades occur almost annually. However, the upgrade pace for smartphone batteries has been notably slower.

This delay is attributed to the critical importance of safety in battery components. Given the potential risks to user safety, even a minor error in battery components could lead to significant harm to a smartphone brand.

Considering this, the manufacturing distribution for Apple’s iPhone 15 series suggests that Apple might not be entirely confident in the production yield rates in India.

If the decision to shift the production of batteries, which requires a special emphasis on safety, to India is solely driven by the need to mitigate geopolitical uncertainties, it indeed poses a certain level of risk for Apple.

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• [Insights] Tata’s Challenge in Securing Large iPhobe Orders After Officially Acquiring Wistron’s India Factory

Apple’s iPhone is gaining even more popularity in India, with Tata Group, India’s conglomerate, reportedly preparing to build a new iPhone assembly plant. According to Bloomberg, this move aligns with Apple’s broader manufacturing strategy expansion in India.

Previously reported by TrendForce, 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. Earlier in October this year, Tata Group officially acquired Wistron’s subsidiary in Bengaluru, primarily responsible for assembling orders for the iPhone 14. 

According to sources from Bloomberg, Tata Group is not only recruiting new staff for this facility but also planning to build the largest iPhone assembly plant in the town of Hosur, Tamil Nadu, India.

The new facility is expected to establish 20 assembly lines, planning to employ approximately 50,000 workers within the next 2 years. It is slated to be operational within 12 to 18 months. However, the existing government-supported PLI (Production-Linked Incentive) fiscal incentives will expire around the time of operation. Therefore, Apple and Tata Group may seek new subsidies from the government for the production of the new iPhones.

Apple has been actively expanding in India, and the new iPhone assembly plant is a crucial strategy for both companies. For Apple, it serves to diversify the supply chain risk by gradually shifting the assembly of iPhones from China to India. Meanwhile, Tata Group aims to expand its traditional business scope.

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• Tata Group to Become the Fourth iPhone Assembler as Production Relocation Accelerates
• [Insights] Tata’s Challenge in Securing Large iPhobe Orders After Officially Acquiring Wistron’s India Factory

(Photo credit: Apple)

Foxconn has announced plans to invest over USD 1.5 billion in expanding its facilities in India. This substantial investment, a rarity in recent years, has sparked speculation that Foxconn is preparing for the introduction of new iPhone products in India.

Due to reports suggesting that in the second half of 2024, Apple will initiate the design, development, and trial production process for the iPhone 17 in India, if true, this would mark the first time in iPhone history that a New Product Introduction (NPI) is conducted outside of China, solidifying India as a potential global iPhone production hub.

Foxconn’s subsidiary, Foxconn Hon Hai Technology India Mega Development Private Limited, disclosed the plan to build the factory locally, with an expected investment of INR 128.209 billion (approximately USD 1.537 billion). This move is seen as a strategic effort to enhance iPhone production capacity in India.

According to TrendForce’s estimate, the proportion of iPhones produced in India is still below 10% in 2023, expected to reach 25-30% by 2025, and projected to achieve 35-40% by 2028. TrendForce believes that with the stable production base of Foxconn in India, it can indeed expand the output.

Analyst Ming-Chi Kuo from TF International Securities disclosed that Apple is placing a growing emphasis on the Indian market. The company intends to kick off the NPI process for the standard edition of the iPhone 17, slated for release in the second half of 2025, in India during the latter part of 2024.

Kuo further highlighted that this development signifies the first instance of a new iPhone model being developed outside of China. Choosing the standard version of the iPhone for development lowers the design complexity, reducing risks. This year, 75-80% of iPhones produced in India are manufactured by Foxconn.

According to a previous report by Indian media Economic Times, Foxconn’s factory in Tamil Nadu, India, has been producing the iPhone 15 Plus in the fourth quarter of this year and has already started production of the standard version of the iPhone 15.

Before the iPhone 14, only a small portion of Apple’s phones were assembled in India, with shipments lagging six to nine months behind those in mainland China. However, this year, India has officially entered the supply chain for the initial batch of new iPhones.

Foxconn’s India representative, V Lee, previously stated that the company was “aiming for another doubling of employment, FDI (foreign direct investment), and business size in India” by next year. However, no further details were provided.

In other product areas, there have been recent reports that three subsidiaries of the Foxconn Group will be among the first approved list of incentives for information technology (IT) production in India. Foxconn Group is also accelerating its layout for manufacturing and components in India.

(Photo credit: Apple)