Although technology giant Apple hopes to reduce its overall dependence on China, its dependence on a Chinese company has continued unabated. The fact has proven that this company's technological value in assembling Apple products is very high and indispensable.
Many Apple customers may not be familiar with LuxsharePrecision or its chairman, Grace Wang, but they may have products that contain LuxsharePrecision technology. Lixun Precision, along with other Apple contractors, produces AirPods, AppleWatch, and the recently released iPhone 15, including the high-end iPhone ProMax series. Li Xun Precision is also the assembler of Apple's first hybrid reality headworn device, which will be available to consumers next year.
The products listed above demonstrate the challenges faced by Apple CEO Tim Cook in reducing production in a competitor country in the United States and relying more on countries such as India and Vietnam.
Last Wednesday, Cook suddenly visited Li Xun Precision's AppleWatch factory near Shanghai and praised the assembly plant for its work in manufacturing Apple's most advanced products. In a video posted on social media, Cook nodded and smiled while chatting with Wang Laichun, the chairman of Lucent Precision. He also visited the solar energy installation that powers the factory.
Thank you, Grace and the Lucent Precision team, for sharing our commitment to protecting the planet with us, "he wrote on social media.
Li Xun Precision initially established a leading position in online cables and connectors. Now it is eroding Foxconn's share in Apple.
In 2017, Cook visited another Lexus precision factory, and the partnership between the two sides was just beginning. Cook praised the supplier for its "extraordinary precision and rigor," and said, "Chairman Grace Wang has created a culture of pursuing excellence
Recently, Apple has encountered some resistance in China, where the Chinese government has ordered officials not to use iPhones or other foreign devices at work, and has reorganized foreign applications. But most iPhones are still manufactured in China, and it may take several years to change this situation.
One reason is that Chinese CEOs like Wang Laichun are experts who can meet Apple's needs.
Wang Laichun's experience is inseparable from Foxconn Technology in Taiwan, which has long dominated the iPhone assembly business located in Zhengzhou, the "iPhone City" in central China. According to analysts, by taking on orders that Foxconn cannot complete, Li Xun Precision is now eroding Foxconn's share in Apple.
Westerners call Wang Laichun Grace Wang. She was born in 1967 in a region in southern Guangdong Province known for nurturing entrepreneurs, including Hong Kong tycoon Li Ka shing. She never went to college and started working in factories when she was in her teens.
In 1988, Foxconn opened a factory in the southern city of Shenzhen, and Wang Laichun was one of the first workers to be employed. She has been working at Foxconn for 10 years, starting from mechanical production work such as manually assembling parts into circuit boards, and becoming a team leader.
In 1998, she started her own business. She founded a factory with her brother to produce products such as wires and TV casings.
According to Li Xun Precision employees, Wang Laichun greatly admires Foxconn founder Terry Gou and often quotes his words when talking to employees, especially in the early years of the company. Foxconn is also the largest customer of Lexus Precision, one level higher than Lexus Precision in the food chain of electronic products. When it went public in 2010, Li Xun Precision stated in its prospectus that about half of its operating revenue in the previous three years came from Foxconn.
Shortly after Li Xun Precision went public, Wang Laichun and her brother Wang Laisheng began a large-scale merger and acquisition. The company was named "Octopus" because they dared to acquire various new business lines. One of the acquired businesses is the production of connection cables for Apple's iPad.
According to Li Xun's precise description, Wang Laichun used her favorite quote to describe her relationship with Apple: "If you fly with a phoenix, you will find a handsome bird.
After establishing a leading position in online cables and connectors, Lixun Precision has shifted its focus to neighboring products including earphones and camera modules. Through a 2016 acquisition of professional technology, Lixun Precision secured an order for AirPods, a product that requires complex manufacturing technology to assemble hundreds of parts into a small space.
Apple sent engineers to help Lexus Precision and found that this contractor can produce AirPods products with high yield. According to the company, Wang Laichun has a deep understanding of Apple products and is familiar with the details of the MacBook model and its charging interface.
During Cook's 2017 visit, Wang Laichun said that Apple's requirements are very strict and have had a very good impact on Lixun. She said that over the years, following in the footsteps of Apple, Lixun has also grown and grown along the way.
People familiar with Wang Laichun say that her personality is to carefully study the latest USB port specifications and ensure that Lixun is the first to master these standards. Wang Laichun, unlike her career leader and Foxconn founder Terry Gou, has always had a relatively low-key public image. Guo Taiming is a high-profile figure who is currently running for the presidency of Taiwan and has established connections with former US President Donald J. Trump.
Li Xun Precision's factory is located in Vietnam's Yuen An County. The company is investing in Vietnam and India to increase production capacity.
However, like many Chinese CEOs, Wang Laichun also holds a political position as a member of the Chinese People's Political Consultative Conference Committee, a political consultation and advisory body. Lixun Precision did not respond to the request for Wang Laichun to be interviewed.
Another round of acquisitions has pushed Li Xun Precision to the top of Apple's supplier list. In 2020, Li Xun Precision took over the iPhone production line in China from Taiwanese assembler Wistron.
According to some people working for Taiwanese suppliers, in the past few years, Apple's Taiwanese suppliers, including Foxconn, have become increasingly dissatisfied with the low profit margins and the huge capital investment required for the company's business. In addition, from the perspective of Apple, the risk of excessive reliance on one company also highlighted at the end of 2022; At that time, China's strict COVID-19 closure and control measures came to an end, and Foxconn broke out worker unrest.
The result is that Apple relies more on Lexus Precision. According to Li Xun Precision's annual report, over 73% of last year's revenue came from the company's largest customer, but the report did not mention Apple's name.
This dependence has raised concerns among investors in Lixun Precision, as the profit margin of the company's assembly business is also very low. Last year's net profit only accounted for 4% of revenue. The company stated over the weekend that its revenue for the July September quarter decreased by 8.5% compared to the same period last year, but profits increased. The company's stock price has fallen by nearly half from its highest price three years ago.
Wang Laichun has stated that Lixun Precision will not overly rely on a few major customers, and she has started acquiring and investing in suppliers for electric vehicle manufacturers. Wang Laichun told investors in August that Lixun Precision's goal is to become one of the world's top automotive parts suppliers that directly collaborate with branded automakers.
Nevertheless, the relationship between Apple and Lixun Precision is still strengthening. Ming ChiKuo, an analyst at TF International Securities who tracks Apple's supply chain, said that Li Xun Precision is handling what industry insiders call "new product introduction" for Apple's high-end iPhone in 2024. This term refers to the process in which Apple collaborates with assembly companies to transform product design and prototype products into detailed production plans. So far, almost all such tasks have been monopolized by Foxconn.
According to precise documents and relevant supply chain sources, the company is also increasing production capacity by investing in Vietnam and India, with the aim of helping Apple diversify its supply to increase sources of supply outside of China. Wang Laichun stated at a meeting with investors in 2020 that the company hopes that Vietnam's production will account for 30% of the company's total production, while not reducing its layout in China.
Li Xun Precision has also started preparing to assemble Apple's next generation virtual reality headwear device, and Guo Mingyi expects the product to enter mass production in 2027.