Luxshare's Wingtech ODM acquisition set to enhance design capabilities and reduce reliance on Apple

Luxshare's planned acquisition of Wingtech's ODM business by the end of 2024 aims to enhance its design capabilities and global presence, while Wingtech shifts focus to semiconductors. This strategic move will help Luxshare diversify beyond Apple orders and expand its global production amid geopolitical uncertainties.

The late 2024 agreement between Luxshare and Wingtech involves the sale of Wingtech's Original Design Manufacturing (ODM) business to Luxshare. This acquisition is expected to boost Luxshare's design capabilities and international footprint while marking the end of Wingtech's ODM operations, a sector it has gradually been conceding to competitors.

Design prowess enhancement

While Luxshare has established itself as a key assembler of iPhones, AirPods, and Apple Watches, its mobile phone design expertise remains limited. Currently, the company's role in mobile phone manufacturing is restricted to iPhone assembly, without involvement in design.

By comparison, Wingtech previously held recognition from Counterpoint Research as the leading mobile phone original design manufacturer (ODM). Major brands including Samsung, Oppo, Xiaomi, and Motorola have entrusted their design and production operations to Wingtech.

Amid the smartphone market slowdown, Wingtech's mobile phone ODM business has experienced declining performance, with production and design falling to just over 33 million units in the first three quarters of 2024, down from more than 67 million units in 2023. The sale of its ODM business to Luxshare will allow Wingtech to focus on semiconductor operations, despite this segment generating substantially lower revenue than its ODM business.

Customer base diversification

The acquisition of Wingtech's ODM business will strengthen Luxshare's design capabilities beyond iPhone assembly. This move positions Luxshare to potentially manufacture mobile phones for brands like Samsung and Xiaomi by inheriting Wingtech's customer relationships.

According to Bloomberg Intelligence, Luxshare is expected to maintain double-digit sales growth in the coming years, primarily due to deeper integration with Apple's supply chain. While this close relationship offers significant growth potential, it also presents concentration risk. This Apple dependency might challenge Luxshare's diversification efforts, particularly in automotive components and data-center networking, over the next two to three years.

Global manufacturing expansion

With Trump's anticipated return to the US presidency, the global mobile phone supply chain prepares for another geographical shift. This development is expected to benefit the ODM business sale, providing Luxshare with strategic advantages. As electronic manufacturers increase investments in Mexico, Southeast Asia, and India to mitigate potential tariff impacts from Trump's policies, Luxshare seeks to rapidly establish a global presence.

Wingtech currently maintains ODM manufacturing facilities in India and Indonesia, alongside nearly eight facilities in China. In contrast, Luxshare has established operations or subsidiaries in Vietnam, India, Mexico, and Germany to serve local market demands.

Source: IDC, January 2025

Source: IDC, January 2025