Linyizhizao'S Acquisition Of Flextronics: Intensive Competition In Apple Industrial Chain

The acquisition was finalized in less than a month.

Flextronics Park in Doumen District of Zhuhai is a well-known local manufacturing coordinate. Now its south factory has been under the control of yizhizao. Previously, the plant mainly produces Huawei terminal products.

Recently, Lingyi Zhizao announced that the industrial and commercial change registration procedures for the acquisition of 100% equity of Flextronics industry (Zhuhai) Co., Ltd. (hereinafter referred to as "Flextronics industry") was completed through the acquisition of 100% equity of Flextronics industry (Zhuhai) Co., Ltd. (hereinafter referred to as "Flextronics industry") through its wholly-owned subsidiary Shenzhen Lingyi Technology Development Co., Ltd., marking the formal change of the controlling shareholder of Flextronics industry into a wholly-owned subsidiary of leader intelligence manufacturing, with a total transaction price of about 367 million yuan.

When visiting the park, 21st century economic reporter saw that the logo made by lingyizhi has covered the factory area. The South factory, which was shut down for more than a year before the acquisition, is ready to recruit new workers.

This is another important acquisition of Apple industrial chain company led by yizhizao, which formally extends to the field of assembly. At present, lingyizhizao's business covers precision functional parts, precision structural parts, magnetic materials and module assembly. Next, Zhuhai Industrial Park will undertake the assembly business of lingyizhi manufacturing machine, including mobile phone assembly.

At the same time, this is also a representative case of domestic Apple industrial chain enterprises to expand upstream and downstream. With the changes of user demand and brand demand, the representative factories have also entered the stage of whole industry chain integration and intensive competition.

Zeng fangqin, founder and chairman of lingyizhizao, told the 21st century economic report that Zhuhai Industrial Park is the 50th place of lingyizhizao in the world. "We started in 2006, and now it's only 14 years ago. The enterprise is still young and still growing at a high speed. We are lucky to seize some industrial opportunities, accumulate some technology, talents and funds, and take advantage of the situation to make layout. However, this game of chess has just begun, and Weiqi has not yet reached the middle game. Now, industrial integration is indeed intensifying, and opportunities are concentrated in leading enterprises. Enterprises need to be prepared in terms of capital, team and other aspects. ".

According to the report of Everbright Securities, in the past ten years, the consumer electronics industry in mainland China has gone to Taiwan for module manufacturing, and in the next decade, it will be Taiwan based for OEM assembly of finished products. The assembly of finished products by mainland enterprises will become a general trend. The trend of leading enterprises in Apple's supply chain extending to downstream OEM is obvious. The finished product assembly business of airpods, apple watch, iPhone, iPad, Android TWS, VR, AR and IOT will drive the rapid growth of revenue and profit of leading consumer electronics enterprises.

March into assembly

"Now the factory buildings are far from enough. In 2021, we still need hundreds of thousands of square meters. At present, the land area of Zhuhai is about 140000 square meters. At the same time, some land has not been built yet, but it is still not enough. " Wu Gang, senior vice president of Lingyi Zhizao, said in an interview with 21st century economic reporter.

The shortage of production capacity can reflect the strong demand of downstream customers. Wu Gang told reporters that the overall order will increase a lot in 2020. The demand for production capacity and business expansion is the original intention of Linyi Zhizao to acquire Flextronics. At the same time, Wu Gang also said that Flextronics has better management of plant operation and maintenance, and it can be used without too much decoration and transformation. Moreover, Zhuhai has obvious geographical advantages and policy dividend, "this is only the outpost of Zhuhai, and we will have further investment in Zhuhai."

As far as Flextronics is concerned, it also needs to deal with factories that have been shut down for a long time. After Huawei was included in the "list of entities" in the United States, Flextronics announced that it would stop cooperating with Huawei. Flextronics itself was also severely damaged. After being removed from the supplier list by Huawei, its profit declined seriously. The Zhuhai Industrial Park was originally the South Zhuhai factory of Flextronics. Previously, it was mainly responsible for Huawei's OEM business, including Huawei's high-end smart phones, Huawei network equipment and other products. The construction layout of the plant and the supporting of the surrounding supply chain fit in with the development of new business of Lingyi in the whole machine assembly.

Therefore, after learning that Flextronics sold the factory, Lingyi Zhizao, with the help of well-known strategic investors, finalized the acquisition in less than a month. Wu Gang said that among many bidders, the overseas distribution of leader intelligence is also an important consideration to attract Flextronics shareholders.

And Lingyi Zhizao can also enter the downstream assembly Market at the opportunity of this acquisition. Specifically, Lingyi Zhizao plans to put the two major businesses into Zhuhai Industrial Park. "One is the assembly business, including a part of the assembly business of mobile phones; the second is IOT related businesses such as wearable," Wu Gang told reporters. "The assembled products have now been confirmed. We will decorate them immediately. With the arrival of equipment and personnel, we can start production soon."

In fact, Linyi Zhizao started to consider the assembly business two years ago, but Wu Gang said: "in terms of mobile phones, we will take small steps to verify and then expand. We think there are three challenges: first, the quality requirements of finished product assembly are the most critical; second, the business of assembly is highly coordinated and capital intensive, so we must be prepared for capital guarantee; third, we should talk about IE (industry) in assembly The ability of engineering mainly refers to the scientific layout of production lines of working procedures and working positions, as well as the measurement and inspection that must be done. In the processing industry, it refers to me (Manufacturing Engineering), which mainly refers to the ability of mold, engineering design and manufacturing process. They are not the same, so we are more cautious

Whole industry chain integration

Vertically, the leading enterprises in Apple's industrial chain are extending their own boundaries. For example, lichen precision has acquired Taiwan's Weichuang iPhone foundry, which will bring about the increase of iPhone assembly OEM business; goer's shares have gradually expanded from airpods and Android TWS to more IOT products; recently, Foxconn has entered the automobile industry OEM, investment in beiteng, and Geely to set up automobile OEM enterprises have caused a lot of attention in the market. It can be seen that the competition between Apple's OEM factories is also more multifaceted and three-dimensional.

Wu Gang told reporters that under the background of a large industry, China's manufacturing industry has begun to be intensively developed. The strong ones are always strong. The production capacity is concentrated in leading enterprises. The Matthew effect is obvious and the factory buildings are not enough. A shares since last year, these leading Apple industrial chain companies have been financing, the head of the enterprise especially appears to have a greater demand for resource expansion.

He further said that on the one hand, it is the centralized orders of the manufacturing enterprises in the head, on the other hand, the upstream and downstream integration of the industry chain itself takes place. "The whole machine wants to be the module, the module maker wants to make some structural parts, and the part maker also wants to make the module and material. We already have an assembly platform, and the acquisition of Celcom is to have the ability of SMT and assembly. "

Behind the intensive competition, on the one hand, is the visible blue ocean market bringing new increment. For example, according to the report of canalys, an industry analysis organization, in 2021, the shipment volume of wearable devices and true wireless headphones will exceed 200 million and 350 million respectively; CAAC predicts that in 2021, China's new energy vehicle sales are expected to reach 1.8 million, with a year-on-year increase of 40%.

On the other hand, industry insiders pointed out to the 21st century economic reporter that the deeper reason lies in the integration of consumer electronics industry chain brought by user demand.

With the promotion of digital life and the catalysis of epidemic situation, users' demand for terminal services is also increasing. For example, users hope that the interactive experience of mobile phones, tablets, headphones, watches, cars and other terminals will be fully accessible, and the remote online interaction will be faster and smoother. And manufacturers, including apple, want to provide integrated products and services as much as possible. In fact, this involves not only the upper application technology, but also the support of the underlying chip architecture. Therefore, we will see the crazy integration of the global whole industry chain, including the merger and acquisition of the semiconductor industry, in recent years.

And the surging market changes are also transmitted from the demand side and terminal to the supply chain behind the products. Consumer electronics brands hope to reach and meet more needs of users, and naturally hope that OEM and assembly plants can provide multi-directional services and solutions. This and upstream semiconductor's bloodbath, in fact, complement each other, hardware supply chain is a sub battlefield.

With the upstream integration, the brand side has been shuffling, with the growth rate of mobile phones slowing down, the competition is more intense. Looking back, there were hundreds of mobile phones in the market before, but now the top ten brands occupy the main market, and there are only two mainstream operating systems. After the survival of the fittest, the existing 3C brands, such as mobile phones, are still facing fierce multi terminal competition. Profits must be diversified and diversified to make more profits. In addition to mobile phones, adding watches, wireless headphones and even entering the field of new energy vehicles, the product line and SKU have become more complex. In this case, apple, as a representative brand, hopes the original OEM industry chain company to provide one-time solutions.

In addition, for the multi supplier strategy of apple and other customers, brand companies should also consider the comprehensive cost of multi product lines. At the same time, this is also an opportunity for domestic enterprises to broaden the upstream and downstream boundaries step by step to obtain more high-end manufacturing capacity. This is a superimposed process.