Luxshare Precision to Assemble Apple Watch Series 6 and Older iPhones

Luxshare Precision, one of Apple's suppliers for devices like AirPods and Apple Watch, is going to be taking on more responsibility in the coming months as it prepares to begin assembling Apple's iPhones.

In a note to investors, Apple analyst Ming-Chi Kuo this afternoon shared details on what Luxshare Precision will be working on this year.

The supplier is expected to enter the iPhone assembly business "in the long run" and earlier than market expectations to allow Apple to diversify its supply chain and cut down on the risk of supply shortages. Kuo believes Luxshare Precision will become a key iPhone case component supplier by the second half of 2021.

The key reason we make this prediction is because the new iPhone product cycle is shortened, so if Luxshare Precision can enter the iPhone assembly business, it is expected to reduce Apple's new iPhone development and supply risk. To ensure a smooth initial assembly business, we expect Luxshare Precision to start assembly from older iPhone models.

Luxshare Precision will start out assembling older iPhone models and will work closely with casing manufacturers to cut down on initial entry challenges. Luxshare Precision is said to have a unique vertical integration advantage because it also provides many iPhone parts and accessories to Apple.

Kuo says that he believes Luxshare Precision will also ship the new Apple Watch expected in the second half of 2020, which would be the Series 6 model. There are no details included about the device, but past rumors have suggested the new device could feature faster performance, improved water resistance, and better wireless transmission.

Rumors also indicate we can expect to see sleep tracking functionality introduced as one of the key capabilities of the Apple Watch Series 6.

Prior information from DigiTimes about the Apple Watch Series 6 suggested the device would be assembled by Foxconn and Compal Electronics while Luxshare Precision would assemble older Apple Watch models, so Kuo's information does conflict with what we've previously heard.

It's possible that Compal Electronics, Foxconn, and Luxshare Precision will all share orders for the Apple Watch Series 6 models.

According to Kuo, Apple's assembly orders in 2020 are "better than expected," which will benefit suppliers like Luxshare Precision "in the long term."