Luxshare Precision (002475.SZ) lays out iPhone and AirPods-related businesses. The purpose is also very simple: to further bond with Apple and face the "sniper" of its old company Foxconn.
On October 27, Luxshare Precision issued two announcements stating that it would provide its wholly-owned subsidiary Luxshare Smart Manufacturing with a total entrusted loan of no more than 1 billion yuan, and plans to increase the capital by no more than US$92 million in cash. News India Ltd.
Two days later, Luxshare Precision issued another convertible bond, and it planned to raise no more than 3 billion yuan.
Among them, 1.1 billion yuan will be used for the technological transformation and expansion project of the production line of smart mobile terminal module products, including linear motors, antennas and other core components of smart phones;
600 million yuan will be used for technological transformation and expansion projects of smart wearable device accessories, including AirPods accessories;
600 million yuan will be used for new projects with an annual output of 4 million smart wearable devices, including the expansion of AirPods.
"The technological transformation and expansion project of the production line of smart mobile terminal module products is to improve the production capacity of mobile phone components such as linear motors through automatic equipment upgrades, and to better develop the iPhone foundry business." A senior executive who supplies equipment to Luxshare Precision Tell Data Jun that the other two expansion projects also increase the production capacity of AirPods and related accessories by upgrading automation equipment and speeding up testing.
Why does Luxshare Precision have to make big moves in a short period of time, busy upgrading technology and expanding production?
As the yield rate of Luxshare precision products was too low to meet Apple's demand, some AirPods orders were taken over by Foxconn. As a result, Foxconn successfully entered the AirPods foundry business.
"Luxshare Precision AirPods has more than 1,000 processes in production, with small products, high precision, and multiple and complex processes, so the yield is very low." The above-mentioned executives explained the reasons.
Although Luxshare Precision's AirPods production line is the world's most automated TWS production line, reaching 40%, it is still actively upgrading automation equipment at various stations to reduce personnel, improve product consistency and reliability, and increase production capacity. "In the future, the AirPods production line can achieve up to 70% automation." The executive said.
Although as the largest foundry of AirPods, Luxshare Precision has performed well in the first three quarters of this year. It not only acquired Wistron and successfully entered the iPhone foundry business, but also made a net profit of 4.68 billion yuan. The stock price increased by more than 100%, and the total market value was 130 billion. Yuan's lead far exceeds the "old club" Foxconn's A-share listed company Industrial Fulian.
However, in terms of overall strength, Luxshare's precision gap is large with Foxconn. In 2019, Luxshare Precision's revenue was 62.4 billion yuan, while Fulian Industrial was 408.7 billion yuan. Foxconn's parent company Hon Hai Precision was about 1.2 trillion yuan, 20 times that of Luxshare Precision. And Luxshare's precise and rigorous factory management is also born out of Foxconn.
As Foxconn takes the lead in AirPods foundry, it will accelerate more mobile phone ODM factories to enter TWS foundry and become the industry leader. Therefore, Luxshare Precision has upgraded the production line and expanded the production capacity of wearable products such as AirPods to stabilize the leading position of AirPods foundry ; One-handedly develop the iPhone-based mobile phone foundry business to improve the automation of mobile phone components and assembly.
Support 3 subsidiaries
In order to reduce costs and increase efficiency, and expand the production capacity of wearable products and related accessories including AirPods, Luxshare Precision strongly supports Kunshan Luxshare Technology and Jiangxi Luxshare Smart Manufacturing, two domestic AirPods foundries.
On the one hand, Kunshan Luxshare Technology is leading the implementation of the "Technical Renovation and Expansion Project of Smart Wearable Device Accessories". At present, it has built a mature connector and connecting line automation production line. The next step will be to focus on the vertical of smart wearable device accessories. Integration, to provide customers with a lighter, thinner, more convenient, and comprehensive smart wearable device accessory product solution. It is expected that the production capacity will be expanded to 35.19 million pieces/year after reaching production.
On the other hand, Jiangxi Lixun Intelligent Manufacturing takes the lead in the implementation of the "new project with an annual output of 4 million smart wearable devices". After just obtaining a total entrusted loan of 1 billion yuan from the parent company, it will receive 600 million yuan to raise funds to expand production. After the full production capacity is reached within 5 years, the production capacity of wearable devices including AirPods will be expanded to 4 million pieces per year. This project will also help Luxshare to enrich more product structures and enhance independent controllability and integrated service capabilities.
In addition to wearable devices, there are also OEMs for smartphones, mainly iPhones.
According to the announcement, Kunshan Liantao Electronics is leading the implementation of the technological transformation and expansion project of the production line of smart mobile terminal module products. Through strengthening technical transformation and expansion, linear motors can be better applied to smart touch screen mobile phones. In addition, it is also beneficial to Luxshare Precision's The development of smart terminal antenna field. It is estimated that after reaching production, the annual output of smart mobile terminal module products will increase 71.88 million sets.
It is understood that Luxshare Precision`s iPhone foundry is mainly implemented in Kunshan Wistron. However, as Apple promotes the transfer of the supply chain to India, a week ago, Luxshare Precision’s overseas wholly-owned subsidiary LUXSHAREPRECISION LIMITED (Luxshare Precision Limited) ) Or ICT-LANTOLIMITED (Liantao Electronics Co., Ltd.), intends to increase the capital of Luxshare India Co., Ltd. (hereinafter referred to as "Luxshare India") with no more than US$92 million in cash to meet the expansion of the factory and production capacity of Luxshare India related requirements.
As of the close of November 3, Luxshare Precision closed at 56.85 yuan, up 0.66%, with a total market value of 397.767 billion yuan.