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Apple to Gain a New Chinese iPhone Maker During a Trade War

·2 min read

(Bloomberg) -- Luxshare Precision Industry Co. is acquiring Wistron Corp.’s iPhone production business in China via a $472 million deal, potentially becoming the first mainland company to win a coveted role assembling Apple Inc.’s device during U.S. trade tensions.

Taiwan-based Wistron, one of just three contract manufacturers that assemble Apple’s iPhones, said Friday it’s agreed to sell two subsidiaries in eastern China for 3.3 billion yuan to Luxshare. One of those units, based in the city of Kunshan, is Wistron’s sole iPhone manufacturing site, according to people familiar with the company’s business.

The deal is a win for Luxshare, which produces accessories and components from cables and chargers to antennas but is also the world’s biggest manufacturer of Apple’s AirPods -- a lucrative business that helped the company become one of 2019’s top Asian stock performers. Apple in turn has sought a mainland Chinese partner in part to broaden local sources during a trade war.

A Wistron representative said the Kunshan site being sold to Luxshare makes smartphones, notebooks and connected devices, and the company will shift production of some of those products elsewhere in China. She declined to comment on the its iPhone business. An Apple representative didn’t immediately respond to an emailed request for comment.

Read more: Apple’s AirPods Fire Up One of Asia’s Top Stocks in 2019

Luxshare and other contract manufacturers have long sought to compete in assembling Apple’s most profitable device. Wistron is the smallest of three iPhone assemblers, lagging behind Pegatron Corp. and Hon Hai Precision Industry Co., the company also known as Foxconn. Wistron continues to assemble cheaper iPhones in India.

“With the acquisition of the Wistron’s iPhone unit, Luxshare can now become an iPhone assembler,” GF Securities analyst Jeff Pu said. “This will first pose a threat to Pegatron’s iPhone business in China.”

The deal is slated to be completed by year’s end pending regulatory approval, Wistron said in an emailed statement.

Read more: IPhone Makers Look Beyond China in Supply-Chain Rethink

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