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China tech

Apple's deeper dive into China boosts Luxshare earnings

iPhone assembler known as 'Little Foxconn' posts 30% revenue growth in first half

Apple now has more suppliers from China and Hong Kong than from Taiwan.   © Reuters

TAIPEI -- Luxshare Precision Industry revealed Tuesday record revenues and a big jump in profits for the first half of 2021, becoming the latest Chinese manufacturer to enjoy a boost from its business as a supplier to Apple.

The Guangdong-based company sometimes called "Little Foxconn," which has been deepening its relationship with Apple and is assembling iPhones for the U.S. technology giant for the first time this year, said first-half revenue grew more than 30% from a year ago to 48.14 billion yuan ($7.42 billion). Net profit was up 22% to 3.08 billion yuan.

The results were achieved despite geopolitical uncertainties, a global chip shortage, the rise of labor and raw materials costs, and on-and-off disruptions from COVID-19.

"Some of our businesses were postponed due to multiple external factors," Luxshare said in a stock exchange filing. "But looking ahead to the second half of this year, we are determined to continue to carry out our five-year corporate growth plan though the external uncertainties are expected to stay."

For more than a decade the iPhone assembly business had been dominated by Taiwanese groups Foxconn and Pegatron, but Apple has been expanding its relationships with Chinese suppliers. Apple now has more suppliers from China and Hong Kong than from Taiwan, Nikkei Asia has reported.

Luxshare began its relationship with Apple in 2013 by supplying connectors before becoming an assembler of AirPod headphones in 2017 and of Apple Watches in 2019. Luxshare will build up to 3% of the upcoming iPhone 13 series including the premium model that is expected to be called the iPhone 13 Pro.

Its elevation to the status of iPhone assembler demonstrates its improving manufacturing capability, given Apple's strict quality standards and requirements, and analysts say it now faces a test of whether it can provide stable quality when the model begins mass production.

Several other Apple suppliers in China have enjoyed significant growth in revenue and profit after engaging more deeply with the company. Since many are taking a vital role in the upcoming iPhone 13 series that will begin mass production this week, according to multiple people familiar with the matter, revenue is expected to strengthen further in the second half of the year.

Lens Technology, a longtime iPhone cover glass supplier and now a provider of metal casing, reported nearly 40% revenue growth for the first half. It acquired Catcher Technology's casing factories in China last summer, and these have now been certified by Apple and this month began supplying aluminum alloy metal frames for the iPhone 13, two people with knowledge of the situation said.

Apple's major iPhone battery module suppliers -- Sunwoda Electronic and Shenzhen Desay Battery Technology, both Chinese -- have also posted strong results recently. Sunwoda's second-quarter profit was up 350% to 488.7 million yuan, on revenue growth of 24% to 7.82 billion yuan.

Chinese chip packaging and testing supplier Jiangsu Changjiang Electronics Technology -- also a key Apple supplier -- saw its first-half net profit surge 261% to 1.3 billion yuan.

Additional reporting from Nikkei staff writer Cheng Ting-fang in Taipei

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