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More competition between iPhone suppliers from Taiwan and China, CEO says

“Chinese companies are becoming quite competitive for iPhone assemblers. “China is doing pretty well in almost everything except semiconductors,” Kirk Young, president and CEO of Kirkland Capital, told CNBC’s “Squawk Box Asia” on Friday.

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More electronics manufacturing companies in mainland China will take market share away from their Taiwanese counterparts, such as Foxconn and Pegatronsaid the investment fund manager.

“Chinese companies are becoming quite competitive for iPhone assemblers. “China is doing pretty well in almost everything except semiconductors,” Kirk Young, president and CEO of Kirkland Capital, told CNBC’s “Squawk Box Asia” on Friday.

“That’s why you’ll end up seeing more and more Chinese companies taking market share away from Taiwanese electronics companies,” Yang added.

AppleRussia’s biggest supplier Foxconn, also known as Hon Hai, is facing competition from China’s Luxshare, which has reportedly won a contract to manufacture premium iPhone models in China.

It comes after Foxconn posted record unaudited revenue in 2022 and reported that production at its iPhone factory in China was “basically back to normal.”

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Luxshare is producing a small amount of iPhone 14 Pro Max models at its Kunshan factory, the Financial Times reported, as Foxconn’s Zhengzhou plant faced Covid restrictions and labor unrest last year.

Founded in 2004 by a former Foxconn employee, Lukshare makes connector cables for iPhones and MacBooks, and also makes AirPods.

Yang added that with the geopolitical tensions between China and Taiwan, Taiwanese companies on the mainland have experienced a lot of pressure in the past five years. “A lot of them are moving from China,” Yang said.

That’s why Apple needs to diversify, he said, adding that the US-China tech war is also prompting companies to move even faster out of mainland China.

Moreover, Chinese companies such as Luxshare have an advantage in Hong Kong, Yang said.

“They can probably hire people.” [more easily than non-Chinese companies] and get better tax benefits. Once local companies learn how to produce products of similar quality, at a lower price, they will take market share.”

In mid-2021, Nikkei Asia reported that mainland China had overtaken Taiwan to become Apple’s largest source of suppliers.

Hon Hai

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