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Apple taps Chinese Supplier Luxshare to assist in developing next-gen XR Devices while Foxconn is working on new entry-priced Units

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A new supply chain rumor is claiming that Apple has chosen China's Luxshare to assist them in the development of augmented reality devices. This marks a first for Apple to chose an Chinese supplier to develop a first-generation product.

Luxshare, China's rapidly rising tech manufacturing champion, has taken over the AR development team in Shanghai that was previously owned by Taiwan's Pegatron, according to five people with knowledge of the matter.

Luxshare's participation is a milestone for Chinese tech suppliers. In previous decades, Apple has relied on Taiwanese suppliers like Foxconn to help it develop the first generations of new product lines. Its decision to rely on a Chinese player like Luxshare comes amid heightened tech tensions between the U.S. and China, and scrutiny of Apple's own reliance on its supply chain in China.

Pegatron, a long-time iPhone assembler, was the first supplier to help Apple develop AR devices, but collaboration on that front was on and off for four years. The Taiwanese company has been making Microsoft's HoloLens mixed-reality headset for years but became skeptical about Apple's AR plans and gradually exited the project to focus on other applications such as automotive and servers, a supply chain executive with knowledge of the matter told Nikkei Asia.

Luxshare, on the other hand, hopes to grab as much business in as many areas as possible from Apple. The company has grown over the years to become the U.S. company's most important China-based supplier and already helps build iPhones, the Apple Watch and AirPods.

Foxconn is also helping with the AR project, according to Nikkei Asia sources. The long-time iPhone assembler will work on parallel development of a cheaper second-generation AR device. Foxconn's focus will be on automating mass production and improving production performance to help Apple lower overall costs.

Apple has high expectations for augmented reality and is tapping the full range of its supply chain to make its devices a success. Two of its most important suppliers, Taiwan Semiconductor Manufacturing Co. and Sony of Japan, have been chosen to develop micro OLED displays for the devices. Part of the development of these displays has taken place at Apple's secretive campus in northern Taiwan.

Micro-displays are built on the base of chips that go through specific display coating processes. Such display technologies are used in military goggles and are extremely expensive. Each microdisplay costs $150 and an AR device needs a pair of such screens. The OLED display used in the 6.1-inch iPhone 14 model costs around $55 to $60. For more, read the full report by Nikkei Asia.

10.0F0  Supply Chain News & Rumors

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