Luxshare Weighs Manufacturing for Apple in US Amid Tariffs: Report
In a move that could potentially reshape the global supply chain, Apple’s supplier Luxshare is in talks with customers on ways to respond to US tariffs by shifting more production outside China, including the United States. According to a report by Reuters, Luxshare’s chief executive, Wang Laichun, stated that tariffs would have little impact on profits and revenue. The company is considering localizing some of its products if a commercial guarantee is provided.
Luxshare, a Chinese company, is one of Apple’s largest suppliers, responsible for producing various components, including cables, connectors, and other accessories for Apple’s devices. The company’s decision to consider manufacturing in the US comes amidst the ongoing trade tensions between the US and China, which have led to the imposition of tariffs on each other’s goods.
The US tariffs on Chinese goods, which were initially introduced in 2018, have been a significant source of tension in the US-China trade relationship. The tariffs, which were initially set at 10% and later increased to 25%, have had a ripple effect on the global supply chain, with many companies, including Apple’s suppliers, feeling the pinch.
Luxshare’s decision to consider manufacturing in the US is a significant development, as it would enable the company to avoid the tariffs imposed on Chinese goods. By shifting production to the US, Luxshare would be able to maintain its relationships with Apple and other customers while also benefiting from the economies of scale and cost savings associated with local production.
In an interview with Reuters, Wang Laichun, Luxshare’s CEO, said that the company was exploring ways to mitigate the impact of tariffs on its business. She stated that if a commercial guarantee was provided, the company would not rule out localizing some of its products. The guarantee, according to Wang, would involve committing to producing a specific quantity of products in the US and ensuring that the products meet the quality standards of Apple and other customers.
Luxshare’s consideration of manufacturing in the US is not unprecedented. In recent years, several Chinese companies have set up production facilities in the US to avoid tariffs and take advantage of the country’s skilled workforce and advanced manufacturing capabilities. For example, in 2020, Chinese electronics company, Foxconn, set up a production facility in Wisconsin to produce components for Apple’s devices.
However, Luxshare’s decision to consider manufacturing in the US is significant, as it would be the first time the company has produced products outside of China. The company’s existing production facilities are primarily located in China, where it has a large workforce and established supply chain.
Luxshare’s decision to consider manufacturing in the US is also significant in the context of the ongoing trade tensions between the US and China. The US has been seeking to reduce its reliance on Chinese goods and services, and the tariffs imposed on Chinese goods are seen as a way to achieve this goal. By shifting production to the US, Luxshare would be able to reduce its reliance on Chinese production facilities and avoid the tariffs imposed on Chinese goods.
In conclusion, Luxshare’s consideration of manufacturing in the US is a significant development in the global supply chain. The company’s decision to explore ways to mitigate the impact of tariffs on its business is a testament to its commitment to maintaining its relationships with Apple and other customers. The potential shift in production to the US could have significant implications for the global supply chain, and it will be interesting to see how this development unfolds in the coming months.
