[News] Foxconn Faces Chinese Tax Investigation, May Shift More iPhone Orders to Rivals

2023-10-23 Consumer Electronics editor

Chinese media reported on the 22nd that China’s regulatory authorities are conducting investigations into Foxconn’s factories in Guangdong, Jiangsu, Henan, and Hubei. This comes at a time when Apple’s iPhone 15 series is in full production and seeing high shipment volumes. The investigation may potentially impact the production capacity of the iPhone 15. Market rumors suggest that Apple is considering gradually shifting orders to competitors, which could benefit companies like Luxshare Precision and Pegatron.

According to Taiwan’s Commercial Times, in response to the recent tax inspection, Foxconn emphasized on the 22nd that it would actively cooperate with relevant agencies in their operations. Major suppliers for iPhone 15 lenses, Largan Precision and Genius Electronic Optical, declined to comment on the situation with individual clients but emphasized that their current shipments are not affected.

Influenced by strong competition from Chinese smartphones, including Huawei, and concerns about overheating issues, the appeal of the iPhone 15 has waned, and the highly anticipated iPhone 15 Pro Max’s popularity has declined. In the Asian market, waiting times for the sought-after titanium alloy casing iPhone have been substantially reduced. Shipping times have decreased to approximately two weeks, while in-store pickup can be as fast as three days. Signs of cooling demand are also appearing in Europe and the United States.

Tech industry insiders note that even though demand for the iPhone 15 has decreased, Apple is still considering expanding its supply chain to be prepared for unforeseen circumstances.

In addition, samples of iPhone 16 components and designs are in the sampling stage, with plans to finalize them by January of next year. The recent tax inspection controversy involving Foxconn, combined with the fact that its competitor, Luxshare, has obtained the assembly NPI (New Product Introduction) for the 2024 iPhone 16 Pro Max, further strengthens Luxshare’s presence in the iPhone business. Its share of manufacturing is expected to increase significantly next year.

Furthermore, Luxshare has already become the primary assembly factory for Apple Watch and AirPods, and in 2020, it acquired two iPhone production lines from Wistron. Luxshare is also a major producer for Vision Pro, representing Apple’s accelerated localization efforts and a move away from its dependency on Foxconn.

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(Photo credit: Apple)