Foxconn loses top-tier iPhone assembly allocation for first time

In a blow to Foxconn, Apple is expected to hand over key manufacturing responsibilities for the iPhone 16 to Luxshare, significantly boosting the supply chain partner’s earnings growth over the next two years, according to Apple analyst Ming-Chi Kuo.

In his latest Medium blog post, Kuo said that Apple has already given Luxshare approval for the new product introduction (NPI) for next year’s iPhone 16 Pro Max, which is a major win for the vendor given that Foxconn consistently ranks the best iPhone mounting has won NPI in previous years.

The approval followed Apple’s decision to transfer some iPhone 14 Pro Max orders from Foxconn to Luxshare to diversify supply and mitigate risk, following the protests and riots that erupted in November 2022 at Canada’s largest iPhone factory. Foxconn in Zhengzhou, China.

Luxshare’s production yield improvement schedule for the iPhone 14 Pro Max subsequently turned out better than expected, leading Apple to award NPI to the company for the 2024 model. That means Apple believes Luxshare’s R&D and manufacturing capabilities have reached the level of a first-tier supplier, Kuo said.

The analyst believes that Apple will now negotiate with the Indian government to help Luxshare set up production lines in India, with the possibility of launching the idea of ​​a joint venture to address investor concerns about the unfavorable geopolitical situation for the remove assembler.

Luxshare’s iPhone business should see significant earnings growth, Kuo says, with the company expected to ship 45-50 million iPhones in 2023, up from about 20 million in 2022, indicating Apple’s growing confidence in and reliance on of the assembler.

Apple aims to triple iPhone production capacity in India within the next two years, as part of a larger plan to diversify its supply chain from China to other parts of the world. According to a report, Apple has instructed Foxconn, Pegatron and Wistron, three of its largest suppliers, to increase their capacity and manpower in the country.

As things stand, the production allocation for next year’s iPhone 16 series will be allocated to Luxshare (iPhone 16 Pro Max), Foxconn (iPhone 16 and iPhone 16 Pro), and Pegatron (iPhone 16 Plus).