Apple's industrial chain is ready to spread. IPhone 14 enters the trial production stage of contract manufacturing, and the company has become the second largest assembly plant.

The new iPhone 14 series is the highlight of the consumer electronics industry in the second half of this year, and Apple has begun preparatory work.

According to Taiwanese media reports, Apple iPhone 14 recently entered contract production trial operation, and Lixun Precision won an assembly order for the basic iPhone 14, making it the second largest assembly plant after Hon Hai. However, Lixun Precision has not yet obtained the new product trial production into mass production service order (NPI), will not have the opportunity to contract manufacturing high-end iPhone 14, that is, the iPhone 14 Pro series.

It is understood that Apple usually sends trial production orders for new mobile phone products to the contract factory in mid-late February every year, that is, Apple introduces this year's new product plan to the contract factory, so that the contract factory is ready for contract manufacturing, such as purchasing raw materials and starting the production line. After the trial production is successful, NPI can be regarded as the early stage of mass production after receiving an order.

Lixun becomes the second largest assembly plant of iPhone 14

In the past, iPhone assembly orders were shared by three Taiwan factories, including Hon Hai, Pegatron and Weichuang, with Hon Hai accounting for the largest proportion.

Last year, Lixun won the iPhone assembly order for the first time and the high-end iPhone 13 Pro assembly order for the first time. Hon Hai held about 75 per cent of iPhone 13 contract production last year, and assembly orders for high-end 6.7in iPhone 13 Pro Max are still exclusive to Hon Hai. Industry insiders had expected that Lixun Precision is expected to overtake Pegatron in 2023 and become the second largest assembly plant of iPhone.

According to Taiwanese media reports, Apple iPhone 14 recently entered contract production trial operation, and Lixun Precision won an assembly order for the basic iPhone 14, making it the second largest assembly plant for iPhone 14.

In addition, Taiwan media sources said that the supply chain revealed that after Lixun joined the ranks of iPhone contract manufacturers, it assembled about 6.5 million (iPhone), last year and actively expanded, hoping to obtain more iPhone contract manufacturing orders. According to the Nikkei News, Lixun is building a large manufacturing park in Kunshan City, Jiangsu Province, with a total investment of 11 billion yuan and covering an area of 40 football fields. It can increase the iPhone assembly capacity to 12 million-15 million units as soon as this year, and will eventually set up 39 production lines.

Strong iPhone shipments from local suppliers may welcome incremental space

IPhone has always been the absolute king of the smartphone market. According to research firm Canalys, Apple accounted for 22% of global smartphone shipments in the fourth quarter of 2021, making it the top spot in the global smartphone market.

At the same time, a number of brokerages have released research reports that Apple is expected to release a "cheap version" of the iPhone SE 5G phone in the spring (or around March 8), with prices starting at 2500 yuan, which is expected to open up the middle and lower end of the market, consolidate its global market share, and further be optimistic about the performance of the core suppliers of the fruit chain.

Fu Chuxiong, an analyst at Galaxy Securities, expects iPhone shipments to reach 245 million in 2022.

In addition to Lixun Precision, other local manufacturers that cut into Apple's supply chain are also expected to have more incremental space. According to Apple's official supplier list in 2020, mainland China has the largest number of new companies in terms of region, playing an increasingly important role in Apple's supply chain.

These include Beijing Oriental, which supplies OLED panels for iPhone, and Pengding Holdings, Linyi Zhisheng, Desai Battery, Lance Technology, Xinwei Communications, etc., which account for a high proportion of iPhone business in revenue.