Apple and Samsung have suffered from American sanctions – their Chinese supplier has to sell factories

Chinese Wingtech Technology, one of Apple’s suppliers, intends to get rid of the contract manufacturing business of electronics and start producing semiconductor products. The company explained the change in strategy by “changes in the geopolitical situation” – Wingtech recently found itself on the US sanctions list.

Image Source: Yihan Wang / unsplash.com

Wingtech has agreed to sell nine wholly owned subsidiaries to another Chinese Apple supplier, Luxshare Precision Industry, which will take over the production of smartphones, tablets, laptops and other electronic devices. At the end of 2023, Wingtech became the third largest contract manufacturer of phones with a market share of 20.6%, Counterpoint Research calculated: the company increased deliveries by 7% thanks to orders from Xiaomi, Samsung Electronics and Honor. After the sale of assets, the company intends to get more involved in the production of chips – it has set itself the goal of becoming one of the leading players in the global power semiconductor industry.

The company, headquartered in Jiaxing (Zhejiang province), was among 140 Chinese organizations included in the “black list” of the Bureau of Industry and Security of the US Department of Commerce. By limiting China’s ability to develop advanced semiconductors, US authorities are seeking to address national security concerns. Wingtech, founded in 2006, has become one of the largest contract mobile phone manufacturers in China; in 2019 it acquired the Dutch Nexperia and entered the wire industry. Nexperia said in December that Wingtech’s restrictions on access to US technology do not apply to the Dutch company, but the latter will comply with US requirements when interacting with the parent company.

The sale of Wingtech’s assets will not affect its semiconductor business. So far, only an agreement of intent has been signed with Luxshare – the final terms of the deal will depend on the outcome of negotiations and legal procedures. Electronics manufacturing has been Wingtech’s main source of revenue, generating 44.3 billion yuan ($6 billion) in 2023, up 12% from 2022. This direction accounted for 72% of revenue, which in 2023 amounted to 61.2 billion yuan ($8.4 billion). The semiconductor business brought the company 15.2 billion ($2.1 billion), a decrease of 5%. Previously, Wingtech intended to expand abroad by launching the production of PCs and smartphones with AI.