Apple Picks Luxshare for MR Headset

Apple’s mixed reality (MR) headset has hit another snag in its production timeline. According to a recent report by Digitimes, Apple has dropped its exclusive assembly partner, Pegatron, for its upcoming MR headset. The Taiwanese firm has been removed from Apple’s supply line and has been ordered to transfer its MR headset assembly and manufacturing operations to Chinese mainland electronics firm, Luxshare.

The report suggests that Pegatron sold its production capacity to other global regions, including selling off its Shanghai-based factory to the mainland competitor. However, as Apple will produce the headset in low volumes, this is not expected to affect Pegatron’s profit margins. The news indicates that Apple has decided to task a fully-Chinese firm to manufacture its products, compared to Taiwanese companies for previous Apple launches. Apple has typically supported Taipei-based manufacturing behemoths for first-generational products, but has since shifted to Chinese companies due to ongoing Sino-US tensions.

Luxshare, the new manufacturer for Apple’s MR headset, recently struck a deal with the tech giant to develop a future iteration of its augmented reality (AR) smart glasses. The former Pegatron facility will host Luxshare’s AR manufacturing facility, and the company will also develop Apple Watches, iPhones, and AirPods.

This recent development comes after Apple scrapped plans for its AR device to focus on its MR headset. The company aims to target high and mid-tier customers with its new product. However, ongoing rumors speculate that the Cupertino-based company may scrap its plans to announce the device at the upcoming Worldwide Developers Conference (WWDC) on 5 June.

Many tech giants, including Meta Platforms, Microsoft, and Google, have shifted their focus away from AR to develop current extended reality (XR) technologies. The global metaverse is also struggling to establish itself, with ongoing debates on privacy concerns and regulation issues.

Meta Platforms has launched similar initiatives by working with Tencent to approve Meta Quest 2 sales across the Chinese mainland. The potentially profitable deal could grant Meta access to China’s massive tech markets for the first time since 2009. This comes after Tencent recently closed its Metaverse division to focus on other products.

The recent developments with Apple and Luxshare highlight the growing trend of Chinese manufacturing firms dominating the tech industry. The move towards using Chinese companies for manufacturing indicates Apple’s shift towards reducing its reliance on Taiwanese companies and towards a fully-Chinese supply chain.

The ongoing Sino-US tensions have led to many tech companies reevaluating their supply chain strategies. The COVID-19 pandemic also disrupted global supply chains and operations, leading many companies to move their operations abroad to diversify their production facilities globally. However, this move towards Chinese manufacturing has also raised concerns about labor practices and human rights violations in China. Many activists have called for tech companies to ensure their supply chains are ethical and sustainable.

In conclusion, Apple’s decision to drop Pegatron and pick Luxshare as its new manufacturer for its MR headset marks a significant shift in the tech giant’s supply chain strategy. It indicates the growing trend of Chinese manufacturing firms dominating the tech industry and the ongoing reevaluation of supply chain strategies by tech companies. However, the move towards Chinese manufacturing also raises concerns about labor practices and human rights violations in China, and tech companies must ensure their supply chains are ethical and sustainable.