Wingtech, a Chinese ODM and IDM powerhouse, announced on December 30 that it has signed a letter of intent to transfer the equity and operating assets of nine ODM subsidiaries to Luxshare Precision Industry. This acquisition would mark a watershed moment in the supply chain landscape.
Through the acquisition of Wingtech's ODM subsidiaries, Luxshare, a principal manufacturer for Apple, will reinforce its status as a vital supplier in the Chinese supply chain, emerging as one of Apple's most significant suppliers in the Greater China region.
Wingtech underscored that its semiconductor division is not involved in the transaction. The company will almost entirely divest its ODM operations upon the completion of the transaction, enabling it to concentrate on accelerating its semiconductor initiatives and transitioning into a pure semiconductor enterprise.
Luxshare to boost position in Apple supply chain
Luxshare's acquisition of Wingtech's nine ODM subsidiaries will enhance its position in Apple's Chinese supply chain. Luxshare has been producing essential Apple products for years, ranging from components to whole assemblies, such as AirPods and AirPods Pro, as well as supplying and assembling Mac computers.
Luxshare began its operations by manufacturing connectors, a practice that is comparable to that of Foxconn. Lai-Chun Wang, the founder of Luxshare, is frequently compared to Terry Gou, the founder of Foxconn.
In 2021, Wang proposed three transformative strategies that would span five years, with the objective of achieving comprehensive development in the automotive, communications, industrial, consumer electronics, and medical care sectors. Her assertive leadership style, which is comparable to that of Gou, is illustrated by the all-cash acquisition of Wingtech's nine ODM firms. Nevertheless, the acquisition's precise financial details have not yet been disclosed.
Luxshare is posing a threat to traditional contract manufacturing giants such as Foxconn by progressively increasing its share in the assembly of iPhones and other Apple devices, as it continues to expand its manufacturing capabilities and scale. Luxshare is now competing for additional assembly contracts for high-end Apple products, in addition to AirPods and specific Mac models.
As Apple's product line grows and market demand rises, Luxshare is expected to gain importance inside the brand vendor's supply chain while expanding operations in Southeast Asia to deal with external competition and challenges.
Wingtech going semiconductor-only
Wingtech can now formally shift to a pure semiconductor company after discontinuing its ODM operations.
In 2023, Wingtech's semiconductor division, a prominent global discrete and power chip IDM, achieved third place in the global ranking of power discrete component companies. Additionally, its semiconductor business experienced considerable quarterly growth in 2024.
Significant milestones in Wingtech's foray into the semiconductor sector comprise the acquisition of Nexperia in 2018 and the 2021 announcement to invest in expanding Nexperia's production capacity, which entails the establishment of new wafer fabrication and packaging facilities in China to satisfy local chip self-sufficiency demands.
In 2022, Wingtech announced its intention to invest CNY12 billion (approx. US$1.64 billion) in a 12-inch wafer foundry in Lingang, Shanghai. The facility effectively initiated operations in the first quarter of 2023, with the primary objective of producing MOSFETs, power ICs, and other power components and ICs. Its monthly production capacity is estimated at 120,000 wafers.
With the rapid growth of the electric vehicle (EV) market, Wingtech is expediting the development of automotive chips through Nexperia, focusing on power semiconductors and logic ICs to capitalize on prospects in automotive electrification.