announced the acquisition, Luxshare Precision stood in front of the stage again. The company was first started in 2004. After its listing in 2010, its boss Wang Laichun went from being a "factory girl" in his early years to a wealthy tycoon. It is expected that Luxshare will complete the acquisition of Wistron's subsidiary by the end of 2020 and enter the supply chain of the Apple product iPhone. If you want to understand Luxshare Precision , Foxconn and Apple are key points that cannot be avoided: whether from the perspective of origin or business, Luxshare's Foxconn mark cannot be ignored; at present, Luxshare's market value has exceeded the "master" Foxconn , and entering the list of Apple core business suppliers seems to mean that the fierce competition between Luxshare and Foxconn is inevitable...
1
Attacking Luxshare Precision
1, Foxconn apprentice
Luxshare Precision boss Wang Laichun is the first batch of workers in the mainland of Foxconn . He worked in the Foxconn line installation business unit under Taiwan Hon Hai Precision for nearly 10 years. He has achieved the highest position of mainland employees and left Foxconn to start his own business.
In October 1988, Foxconn built a factory in Shenzhen, recruiting the first batch of 150 employees from Chenghai, Chaozhou, Fengshun and other places in Guangdong. With his persistence and hard-working spirit, Wang Laichun leaped from the status of a lower-level employee to the management level during his 10 years at Foxconn , and achieved the highest position of mainland employees in Foxconn - the head of the department.
In 1999, Wang Laichun was 32 years old and had a bright future, but she left Foxconn . She and her brother Wang Laisheng invested in the purchase of Luxshare, Hong Kong, and started the same business as Foxconn : research and development, production and sales of various electronic connection cables and connectors.
2004, Wang Laichun created Luxshare Precision in Shenzhen, and Foxconn is still the core customer that contributes more than 50% of its revenue. In the early stages of the company's development, Foxconn provided order support for electronic connection cables, connectors and other orders to this former employee. Luxshare thus entered the global industrial chain through Foxconn .
↑↑ Foxconn was a big Luxshare early customer↑↑
2010 prospectus shows that Luxshare's revenue from Foxconn exceeded 45% for three consecutive years, and Guo Taiming's younger brother Guo Taiqiang also became Luxshare's third largest shareholder on the eve of listing. In 2010, Luxshare Precision was listed on the Shenzhen Stock Exchange, and founder Wang Laichun's net worth reached 2.3 billion. The former working girl is on the list of rich Chinese people.
2. After "Octopus" used mergers and acquisitions to promote expansion
0 to obtain sufficient funds, Luxshare started a series of acquisitions and shares. Because of its steady and accurate expansion of mergers and acquisitions, it is nicknamed "octopus". Wang Laichun's "octopus"-style swallowing trajectory is generally: first through horizontal integration, eat up opponents in the field of cables and connectors, becoming an unsatisfactory leader, and then start to carry out vertical integration with large raindrops and low thunder in the industry, so that Luxshare Precision , with a thin foundation and poor foundation, quickly enters a new field - from connectors to soft boards, acoustic components, and then to camera modules.
In 2011, after Luxshare Precision went public, it acquired 60% of Kunshan Liantao's equity, which is regarded as a key step to enter the Apple industry chain. Kunshan Liantao mainly produces connection line products and is used on iPad tablets. It is precisely because of this that Luxshare Precision has entered the Apple supply system for the first time, and has successively obtained key orders such as iPad internal cable, MacBook power cable, Apple Watch wireless charging and watch strap, as well as Type-C and iPhone adapters.
Also in 2011, Luxshare Precision acquired Cole Communications and entered the field of communications, becoming a connector supplier for customers such as Huawei and Emerson Network Energy.
In 2012, the acquisition of Fujian Yuan Optoelectronics Co., Ltd. entered the automotive electronics field, and acquired Zhuhai with full investment win-win, entering the 3G and smartphone industry chains, and entering the production field of FPC (flexible circuit board).
In 2013, it acquired a stake in Taiwanese connector manufacturer Xuande, which was the first time Luxshare has formed a relationship with a Taiwanese factory; it acquired SUK, a German automobile plastic parts company, and entered the supply chain of luxury car manufacturers.
In addition, there are Jiangxi Boshuo (added connectors and cable manufacturing), Fujian Yuanguang (automatic wiring harness assembly), etc. Luxun uses acquisitions and shareholding to expand the boundaries of its business step by step.
2017, Luxshare Precision entered the fields of acoustic components and assembly by acoustic components factory Meilu Suzhou Factory. With this acquisition, Luxshare successfully entered the Apple acoustic supply chain and became the foundry of AirPods, a true wireless headphone (TWS) in AirPods. After a series of capital operations of
, the OEM empire of Luxshare Precision is becoming increasingly strong, and its dependence on Foxconn has also rapidly decreased. Luxshare Precision has successfully become the OEM factory of leading technology companies such as Apple and Huawei.
In April 2020, Luxshare Precision released its 2019 annual report, with operating income of 62.5 billion yuan, a year-on-year increase of 74.38%; net profit attributable to shareholders of listed companies was 4.71 billion yuan, a year-on-year increase of 73.13%, both higher than market expectations. In the earlier quarters, Luxshare also maintained a high growth rate.
Luxxon has become the leader in OEM and has become one of the core suppliers of Apple . By acquiring Wistron factory, it finally entered the field of OEM.
On the evening of July 17, Luxshare Precision issued an announcement stating that its controlling shareholder plans to acquire 100% of the equity of Wistron Investment (Jiangsu) Co., Ltd. and Weixin Zitong (Kunshan) Co., Ltd. for RMB 3.3 billion. A research report by China Merchants Bank Securities stated: If the equity acquisition is successful, it will broaden the sales channels of the company's existing products, and effective synergy with the company's existing business will also be conducive to the deep vertical integration of the listed company's components, including existing connectors, wireless charging, antennas, acoustics, motors, etc., as well as SIP and many potential new business layouts, the synergy effect will be more obvious.
2
Getting into Apple , cutting into the iPhone OEM cake
1, AirPods became the largest money tree
As early as 2011, Luxshare entered the Apple supply chain by acquiring Kunshan Liantao Electronics. The important factor that has promoted Luxshare's cooperation with Apple in recent years is a acquisition of Luxshare in 2016: through the acquisition of Suzhou Met, Luxshare officially entered the acoustics field and penetrated into the acoustics field of Apple .
In the first half of 2017, Luxshare officially became the production factory of Apple wireless headphones AirPods, with hundreds of parts and a production line requiring hundreds of employees. Luxshare Precision 's product yield is high, and it has won the favor of Apple .
2017, at the 4th Internet Conference in Wuzhen, Apple CEO Cook went to the factory inspection site of Luxshare Precision , praising Luxshare as a "super-class factory" and "integrating amazing exquisite craftsmanship and careful thinking into the manufacturing of AirPods."
When Cook visited Luxshare, Airpods was mainly assembled and OEM by Taiwanese manufacturer Yingyeda. Later, the order proportion of Luxshare Precision completely surpassed Yingyeda and has become the main supplier of AirPods. From 2017 to 2019, Luxshare's performance and stock price took off. So far, Luxshare is also the largest foundry in the AirPods series.
Luxxx Precision 's rapid development is inseparable from the supply chain of Apple , especially AirPods, which has become Luxxx's most important money tree. In 2019, the top five customers of Luxshare Precision contributed 48.2 billion yuan in revenue, accounting for 77% of the total revenue. Apple , as the largest customer, contributed 34.65 billion yuan in revenue, accounting for as much as 55.43% of the total revenue.
2020, Luxshare Precision was not affected by the epidemic. The revenue in the first quarter maintained rapid growth, an increase of 83% from the same period last year to 16.5 billion yuan, and net profit increased by 59.4% year-on-year to 982 million yuan. Products that provide supporting services for Apple mobile phones and headphones are still the most important source of profit for Luxshare Precision .
2, enter Apple core business
Compared with wearable devices such as AirPods, iPhone is the real core business of Apple . Wistron, Pegatron and Foxconn are both OEM factories of Apple iPhone. The headquarters are all located in Taiwan, China and have factories in mainland China.
In 2017, Wistron obtained an order for a new iPhone and spent 200 million to expand its factory in Kunshan, mainly producing Apple cheap iPhone. However, Wistron's factory in Kunshan has not actually entered the OEM business of Apple high-end phones. In the past, it mainly focused on the production of iPhone SE, iPhone 8, and iPhone XR. Due to quality problems, it was ordered to suspend work by Apple for two weeks. In 2018, Wistron also missed the first batch of assemblers. Kunshan Wistron's profit margin fell and was in a loss state for three consecutive years.
Due to changes in the external environment and its own effects, Wistron plans to shift the focus of iPhone assembly to India, gradually increasing investment in Southeast Asia and other places, and selling Kunshan factories is related to its strategic transfer, and Luxshare Precision has become a "taker".
For Luxshare Precision , compared with previous OEM Airpods headphones and other peripheral products, iPhone is the core product of Apple . Luxshare's past business of Apple has achieved great benefits. If it can enter the entire OEM of iPhone, it will undoubtedly bring Luxshare Precision to a new round of development.
Of course, Luxshare Precision faces two problems, whether it has the strength and whether it can obtain the order for the entire machine of Apple iPhone. These two issues are equally important. Compared with parts, the entire Apple iPhone is more complex, and Wistron's production line in Kunshan is mainly to produce cheap iPhones. After Luxshare Precision takes over, it also needs to transform and upgrade its technology. In addition, Luxshare Precision also faces head-on competition from its biggest rival Fuji Fu.
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