Apple’s mixed reality (MR) headset has faced new setbacks after it dropped its exclusive assembly partner, Digitimes reported on Tuesday.
Apple initially tasked Taiwanese firm Pegatron with assembling its upcoming MR headset, but has recently removed the company from its supply line, the report said. It added Apple ordered Pegatron to transfer its MR headset assembly and manufacturing operations to Chinese mainland electronics firm Luxshare by March.
According to the findings, Pegatron sold its production capacity to other global regions. This included selling off its Shanghai-based factory to the mainland competitor.
Pegatron is also unlikely to see major losses from the sell-off due to Apple’s large volume sales. As Apple will produce the headset in low volumes, this is not expected to affect Pegatron’s profit margins.
The news indicates that Apple will task a fully-Chinese firm to manufacture its products, compared to Taiwanese companies for previous Apple launches.
Pegatron has recently moved its operations abroad to India and North America, among others, to diversify its production facilities globally. This comes in a move shortly after the COVID-19 pandemic, which severely disrupted global supply chains and operations.
Pegatron opened its second factory in Chennai, India, to reportedly manufacture Apple iPhones and “diversify production away from China,” according to Reuters.
Apple-Luxshare AR Deal
The development comes just weeks after Apple struck a deal with Luxshare to develop a future iteration of its augmented reality (AR) smart glasses.
Citing five anonymous sources familiar with the situation, the Nikkei Asia report revealed that the former Pegatron facility would host Luxshare’s AR manufacturing facility.
Apple has typically supported Taipei-based manufacturing behemoth for first-generational products, but has since shifted to Chinese companies due to ongoing Sino-US tensions.
Sources speaking on the matter in the report added Pegatron had produced Apple’s iPhone and AR lineup. However, the firm withdrew from Apple’s AR headset development to focus on automotive tools and servers.
Luxshare acquired Pegatron’s share of Apple’s supply chain and scaled up its solutions for the Cupertino-based firm MR headset. It will also develop Apple Watches, iPhones, and AirPods.
Global Metaverse Struggles
The news comes after Apple scrapped plans for its AR device to focus on its MR headset to target high and mid-tier customers. Numerous firms, including Meta Platforms, Microsoft, and Google shuttered their AR ambitions to focus on developing current extended reality (XR) technologies.
Ongoing rumours also speculate that the Cupertino-based company may also scrap its plans to announce the device at the upcoming Worldwide Developers Conference (WWDC) on 5 June.
Meta Platforms 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.
Chinese government regulators banned the company’s Facebook platform over reported links to Uyghir uprisings in the nation’s westernmost Xinjiang province at the time.
