In May Nikkei Asian Review reported that Apple was in the works behind closed doors to push Luxshare, the world’s largest contract electronics supplier up in the ranks in China to potentially overtake Foxconn and others.
Two months later, seemingly acting on the push by Apple, Luxshare purchased two subsidiaries in Foxconn’s rival Wistron including one iPhone assembly plant, both direct bulls-eye targets into Foxconn. The purchases and high-ambitions for Luxshare came, and still comes under the backdrop of a tense US-China tradewar.
Today, a new report by the Financial Times reports that Luxshare continues to grow and that despite its efforts, Foxconn is unfazed by the supplier’s growth.
Luxshare was founded by Ms. Wang, a previous employer of Foxconn in 1998. Her previous employment with Foxconn seems to have helped her in building Luxshare. According to the report, many of Luxshare’s management and working styles are similar to those found at Foxconn plants.
Luxshare declined requests for an interview and a factory visit. But people who have worked with the company said it resembled Foxconn in many respects. “Some of Chairman Gou’s famous sayings were hanging on the walls, and her management style was also really similar to his,” said the Foxconn executive, pointing to an emphasis on discipline and execution.
But Ms Wang has gone much further in her emulation of Mr Gou. After taking Luxshare public in 2010, she went on an acquisition spree, buying a pole position in the iPhone supply chain component by component — just like Foxconn had done.
According to the same report, Apple CEO Tim Cook has been “crucial” in building up Luxshare’s metrics in part thanks to his past job as a procurement manager.
According to industry experts, Tim Cook, Apple’s chief executive, has been a crucial factor in Luxshare’s meteoric rise. “He supported Luxshare in key moments, and leaned on Foxconn to help cultivate them,” said Kirk Yang, a private equity investor who covered Foxconn for more than a decade as an investment banking analyst.
Pointing to Mr Cook’s past job as a procurement manager and his key role in building Apple’s supply chain with contract manufacturers, Mr Yang said: “As a procurement manager, he wants more than one supplier.”
Besides a strategic standpoint to remove reliance in China, Don Yew an analyst at Morningstar told the Financial Times that iPhone sales are increasingly driven by lower-end models, like the iPhone SE. In order to continue meeting lower-end model demand, Apple needs to cut production costs including introducing new suppliers into the iPhone supply chain.
Sources from within Luxshare quoted in the report also stated that Foxconn has “welcomed” the company’s expansion into the iPhone supply chain. An executive at Luxshare also says that neither company has a “vested interest to lose.”