In October 1988, Gou finally stood on the land of Longhua, Shenzhen. A factory of more than 100 people was ready to rise on this wasteland. This year was also known as “the first year of Taiwanese businessmen”. At that moment, Gou may not have realized how much changes Foxconn’s entry will bring to China’s manufacturing industry, and how many talents in the electronic manufacturing industry will be trained in this “electronic besieged city” and how many Foxconn apprentices will be trained in mainland China.

in the first year of the Longhua factory in Shenzhen, there was a humble female worker. As the first batch of Foxconn workers in mainland China, she was only 21 years old this year.

nine years later, the former female workers have been promoted to “section chief” — the highest position that mainland management can achieve in Taiwan enterprises like Hon Hai. Having gained enough experience, she chose to leave and co acquired Hong Kong’s Lixun with her brother. This female worker was called Wang Laichun, and the company was later called Lixun precision.

after the acquisition of Lucent Hong Kong, Wang Laichun began to give full play to what he had seen and learned in Foxconn, and chose to start with the OEM of connectors in his old bank. In 2004, Wang Laichun established Lixun precision in Shenzhen, and soon became the leader of connector OEM in mainland China. In 2010, Lixun precision was listed on the Shenzhen Stock Exchange, and Wang Laichun, the founder, was worth 2.3 billion yuan.

the former Foxconn apprentice, after more than 20 years, has finally become an opponent who can compete with the master in the competition.

on the evening of July 17, Lixun precision announced that its controlling shareholder planned to purchase 100% equity of Weichuang investment (Jiangsu) Co., Ltd. and Weixin Zitong (Kunshan) Co., Ltd. at a price of RMB 3.3 billion. Lixun precision plans to invest no more than 600 million yuan, and plans to complete relevant transactions by the end of 2020. After completing the transaction, Li Xin precision will also become the first Chinese mainland foundry manufacturer of iPhone.

previously, the production of iPhones was monopolized by Taiwan manufacturers. According to the calculation of Yuanta, the proportion of Hon Hai group was higher than 70%, that of Taiwan Heshuo was more than 20%, and that of Taiwan Wistron was less than 5%.

lichen’s entry into OEM of iPhone is regarded as a counterattack call from the mainland manufacturing industry. Nikkei news describes the impact of this acquisition with the title of “the end of the history of Taiwan enterprises monopolizing iPhone production.”.

as an “Apprentice”, lichen precisely and perfectly reproduces Foxconn’s growth path, from OEM of connector to OEM of module, and finally to OEM of complete machine. Wang Laichun obviously learned the most essence of Foxconn in his career. Of course, Wang Laichun is not afraid of this. He has repeatedly publicly stated that the company’s growth is exactly learning from Hon Hai’s model.

after digging the first pot of gold through connectors, Lixun was listed on the Shenzhen Stock Exchange in 2010. With sufficient funds, lichen has started a series of acquisitions and shareholding steps:

in addition, there are Jiangxi Boshuo (add code connector and cable manufacturing), Fujian Yuanguang (automobile wiring harness assembly) and so on. By means of acquisition and shareholding, lichen has expanded the business boundary step by step.

one of the most important acquisitions recently was that in 2017, by acquiring the acoustic component factory, American law Suzhou plant, we entered the field of acoustic components and assembly. With this acquisition, we have successfully entered Apple’s acoustic supply chain and become the OEM of true wireless headset (TWS) airpods.

these three years are also the three years of rapid growth of TWS industry. The disappearance of 3.5mm earphone hole makes the real wireless earphone in the ear become a hot commodity. From 2017 to 2019, the company’s performance and share price took off. So far, it is also the largest OEM of airpods series.

in April this year, Lixun precision released the annual report of 2019, during which the operating revenue was 62.5 billion yuan, with a year-on-year growth of 74.38%; the net profit attributable to shareholders of listed companies was 4.71 billion yuan, with a year-on-year growth of 73.13%, both higher than market expectations. And earlier a few quarters, Lixun also maintained a high growth rate.

so far, the market value of Lixun precision has exceeded 400 billion yuan (about 57 billion US dollars), while the market value of Hon Hai Group has hovered around 30-40 billion US dollars in recent years.

it is undeniable that Lixun precision grew up under the wings of Hon Hai. In the early years, most of the revenue of Lixun came from the support of Hon Hai, that is, lichen OEM the connectors and then handed them over to Foxconn for production. According to the 2010 prospectus, revenue from Foxconn exceeded 45% for three consecutive years, and Guo taiqiang, brother of Gou Taiming, became the third largest shareholder of Lixun on the eve of listing.

relying on “buy and buy”, lichen has become a leading OEM company and one of Apple’s core suppliers. Through the acquisition of Wistron factory, it has finally entered the field of OEM of complete machines.

compared with airpods, apple watch and other product lines, Apple’s core business iPhone OEM threshold is higher. For the current Lixun, starting from acquisition, it is a steady move.

Weichuang’s factory in Kunshan did not enter into the OEM business of Apple’s high-end computers. In the past, it mainly produced iPhone se, iPhone 8 and iPhone XR. Because of quality problems, it was ordered by apple to stop work for two weeks. In 2018, wetrong was not included in the first batch of assemblers. Kunshan Weixin’s profit margin was lower, and it was in a loss state for three consecutive years.

if the equity acquisition is successful, it will broaden the sales channels of the company’s existing products, generate effective synergy with the company’s existing business, and will also be conducive to the deep vertical integration of components of listed companies, including existing connectors, wireless charging, antennas, acoustics, motors, etc., as well as SIP and many potential new business layouts. The synergy effect will be obvious.

although Gou has resigned as chairman of Foxconn, he is still the leader behind Hon Hai group. According to Taiwan media “Economic Daily”, the acquisition of Lixun caused a shock to Taiwan’s related industries. Gou was shocked and highly concerned about the follow-up development. Liu Yangwei, chairman of Hon Hai group, also ordered to actively deal with the industrial risks brought about by the acquisition of Weichuang assets by Lixun precision.

of course, the scale and volume of Foxconn are still hard to contend with in a short time. In 2019, Hon Hai Group achieved an operating revenue of NT $5.34 trillion, and Lixun was still only a fraction. The European legal report indicates that the acquisition of weft China plant is limited to Hon Hai and Hun Shuo in the short term. Hon Hai has the leading position in the assembly technology of stainless steel chassis, which can ease the impact of iPhone.

from the perspective of competition, the annual output of Apple products is limited. Every time the company gets an additional order, it means that other suppliers are missing one. The original order of Ericsson’s OEM airpods was snatched from Yinghuada in Taiwan, while the order of OEM Apple watch was snatched from Taiwan’s Guangda computer, which is a stock market of mutual competition.

Taiwan’s OEM level is still the world’s leading, but apple, which has tasted the sweetness of low-end models, has more extreme cost control; and Taiwan’s OEM enterprises have higher OEM costs due to their larger size and higher bargaining power. In order to control the cost of the whole machine, apple began to support new agents, which is what apple is good at and has been doing in the past. The entry of Lixun has Apple’s support behind it.

in addition, the Nikkei report has also reported that Apple has instructed ritzon to participate in the investment in Kecheng technology, a metal case supplier for iPhone, hoping to support lichen to challenge Hon Hai’s long-term market positioning in the electronic assembly industry.

in addition to Lixun, BYD has also entered the apple assembly supply chain. According to the research report released by guomingji, an analyst at Tianfeng international, BYD electronics is expected to replace Guangda as the exclusive assembly supplier of iPod touch in 2020, and will also take at least 10-20% of iPad assembly orders from Renbao in the future.

what worries Gou even more is the foundation of Taiwan’s entire electronics industry. In other words, OEM used to be the starting point of Taiwan’s electronic industry chain.

there is no doubt that the electronic industry is the pillar of Taiwan’s economy. According to, the total export volume of the whole year in 2018 was 336.05 billion US dollars, of which the export amount of electronic components was 110.8 billion US dollars, accounting for the highest proportion of 33%. At the same time, Taiwan also plays an important role in the global industrial chain.

since the 1980s, Taiwan has defined science and technology and manufacturing as the pillars of its economy. Under the promotion of policies, after years of accumulation, Taiwan’s electronic industry has finally achieved its present achievements.

there are several labels in Taiwan’s electronic industry: excellent yield and good service attitude. Among the world’s top 50 semiconductor manufacturers, Taiwan accounts for 8, and TSMC stands out among the others; while Hon Hai group ranks 23rd in the world’s top 500 in terms of its low profit margin and technical threshold.

but at the same time, Taiwan is also facing a variety of economic dilemmas, such as industrial outflow, insufficient domestic investment, low salary of fresh graduates and so on. Therefore, the electronic industry is a strong field that Taiwan can not lose, and it is also the economic foundation for its survival.

Taiwan’s electronics industry is booming in OEM. In the 1990s, PC entered a period of rapid development, and the season change cycle accelerated. In order to reduce costs, manufacturers began to outsource the production process. At this time, Taiwan, with a certain manufacturing base and relatively low labor costs, has become an ideal OEM choice.

with the brilliance of PC industry, Taiwan’s OEM and ODM factories have ushered in a golden period of development. When PC began to decline, it ushered in the rise of smart phones, and the OEM factories will always have food to eat.

in addition to factors such as scale and service attitude, a model that can not be ignored is the vertical integration of Hon Hai, that is, the “three steps” mentioned above: Hon Hai can not only quickly integrate industry resources, but also produce many key parts by itself, without the need for import and procurement. Therefore, Hon Hai has obvious advantages in efficiency and profit margin.

although OEM is a labor-intensive industry with very low added value, it is the last link in the production chain of electronic products, which is inseparable from the upstream and downstream. At the same time, it also plays an obvious role in promoting employment and industrial chain building.

the OEM business of Hon Hai and Heshuo will revitalize the entire industrial chain, and the OEM business is the “barometer” of the whole industry. This is also the underlying cause of their anxiety. In

2012, only 8 of the apple supply chain lists came from mainland China, which together had 2% profits. By 2019, this figure increased to 30, plus 40 in Hongkong, the first time to surpass Japan, while China Taiwan still had the largest number of apple supply chain enterprises, reaching 46.

but we should pay attention to another number: compared to 2018, Apple’s supply chain introduced 25 new companies in 2019, 5 of which came from Hongkong, China and 4 from mainland China, while 25 of the 25 companies eliminated, 8 were in Taiwan, while China was in the Chinese mainland.