Shulou(Shulou.com)11/24 Report--

According to a number of people familiar with the matter, Chinese contract manufacturer Lixun Precision has won a big order from Apple to produce high-end iPhone models in China. Lixun Precision is the main competitor of Foxconn and Pegatron in the mainland.

Lixun has produced a small amount of iPhone 14 Pro Max at its Kunshan plant northwest of Shanghai since November to make up for Foxconn's production losses, according to two people with direct knowledge of the situation.

Lixun Precision is winning more and more business orders from Apple. Previously, Foxconn has always been in charge of producing the new iPhone Pro, and now Lixun Precision has proved that it can independently assemble Apple's complex devices.

In recent years, Apple's relationship with Chinese manufacturers has become closer. AirPods and Macbook assemblers Gale Technology and Wentai Technology have all benefited, while Foxconn is trying to reduce its dependence on China by building plants in India, Vietnam and the United States.

Foxconn's shutdown has led to a shortage of iPhone and could break Apple's 14th consecutive quarter of revenue growth. Foxconn said this week that the Zhengzhou plant had increased capacity and achieved 90 per cent of its original target in December.

"Foxconn has no bargaining power," said Ivan Lam, an analyst at Counterpoint. "winning high-end iPhone orders is a testament to Lixun's precision ability to serve a more diverse range of customers."

Foxconn and Pegatron declined to comment. Apple and Lixun didn't respond to requests for comment.

Apple has been trying to diversify its supply chain and no longer rely entirely on Foxconn. But even senior assemblers who currently produce basic iPhone models find it difficult to produce the latest high-end iPhone.

Employees and experts say Lixun Precision was able to produce high-end iPhones this year thanks to heavy investment from Apple. "with Apple's investment, including more supply chain managers, it took Lixun only a few months to deliver the initial order," said an Apple employee. " Foxconn usually takes six months to revamp the production line of new iPhone models, the employee said.

Eddie Han, an analyst at market research firm Isaiah Research, said Apple's heavy investment in Lixun Precision was crucial to mass production of the Pro model.

Lixun Precision, founded by former Foxconn employees, has been expanding its influence in Apple's supply chain for years. The company assembles Apple products such as the AirPods, but has never won an order for a high-end iPhone model.

Lixun's annual revenue has soared from less than $2 billion in 2016 to $24 billion in 2021, making Apple the company's largest partner. During this period, Lixun's profit margin fell from 8.6% to 5.1%, indicating that Apple's contract competition has become increasingly fierce.

Lixun's shares have fallen 44% over the past year, dragged down by the collapse in global technology stocks. Foxconn shares fell 22%.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.