Goertek flees Apple's supply chain, 10 billion yuan is not enough
GoerTek is serious about leaving the Apple supply chain.
On the evening of October 17, GoerTek announced that it had terminated the plan to acquire 100% equity of Midea Precision Technology and Changhong Industrial under Lianfeng Business Group for approximately HK$10.4 billion (approximately RMB 9.497 billion at the current exchange rate).
Public information shows that the plan was first announced on July 23, aiming to enhance GoerTek's competitiveness in the field of precision structural components through the acquisition. The funds would be sourced from self-owned or self-raised funds.
Both Midea Precision and Changhong Industrial are core manufacturers of Apple mobile phone structural components. If this transaction were to be successfully completed, it would further consolidate GoerTek's position in the Apple supply chain.
Looking at GoerTek's recent series of capital operations, including the "marriage" with Shanghai Aolai and the acquisition of British Micro-LED giant Plessey, combined with this "abandonment" of the opportunity to consolidate its position in the Apple supply chain, GoerTek seems to be shifting more attention to the proposition of "leaving the Apple supply chain" in the name of optical technologies such as VR.
However, as Apple starts to abandon head-mounted displays and increases investment in AI glasses, a magical future scenario may emerge. That is, after a series of operations by GoerTek, it may encounter Apple again in the VR contract manufacturing and other tracks in one or two years.
GoerTek, which once suffered a great loss from being tied to Apple, feels rather helpless.
Apple's Soaring Performance
Apple has returned to the peak.
On October 21, Apple's stock closed up 3.94%, hitting a record high of $262.24. Its total market value reached $3.89 trillion, surpassing Microsoft to become the second-largest company by market value in the United States, second only to NVIDIA.
A report from research firm Counterpoint shows that the early sales of the iPhone 17 series were strong in the Chinese and US markets, with sales 14% higher than those of the iPhone 16 series. In particular, the sales of the basic model of the iPhone 17 almost doubled in China.
Before the official release of the iPhone 17 series, due to the relatively small product updates and the lack of AI and other functions in previous products, public opinion was more pessimistic about Apple.
This time, Apple has fully unleashed the potential of the iPhone 17, with all functions maximized. Even the basic model of the iPhone 17 is equipped with features such as high refresh rate.
The screenshot is from the official Apple website.
Analyst Mengmeng Zhang said: "The basic model of the iPhone 17 is extremely attractive to consumers, with significant cost-performance advantages. It is equipped with a more powerful chip, an upgraded display, a larger storage capacity, and an improved front camera, while the price remains the same as that of last year's iPhone 16."
Generally speaking, Apple's soaring performance will drive the entire Apple supply chain to take off, whether it is a direct stimulus to stock prices or an acceleration of the integration within the Apple supply chain.
In 2020, Lens Technology acquired 100% equity of Kexing Technology (Taizhou) and Keli Technology (Taizhou) for RMB 9.9 billion. Kexing/Keli is the main supplier of metal casings for Apple's MacBook and iPad, with mature CNC processing and surface treatment technologies.
At that time, Apple was at the height of its popularity. According to monitoring data from CINNO Research, the sales volume of smartphones in the Chinese market in 2020 was approximately 305 million units, a significant year-on-year decrease of 21%. The sales performance was slightly lower than expected, mainly due to the combined effects of the domestic epidemic and multiple market factors. However, Apple's sales reached 38.7 million units, a year-on-year increase of 13%. It was the only brand among the top five brands with a year-on-year positive growth in sales, with a market share of 12.7%, a year-on-year increase of 3.8 percentage points.
At that time, Apple started to dominate the global market. Data shows that Apple's profits were $57.411 billion in 2020, $94.68 billion in 2021, $99.803 billion in 2022, and $96.995 billion in 2023, all ranking first in the world.
Some analysts pointed out that when an upstream giant like Apple experiences a sharp increase in performance, downstream suppliers naturally hope to achieve rapid integration, join forces to obtain larger orders, and "become bigger and stronger" together. It is rare for there to be a situation where they "cannot reach an agreement".
Therefore, when GoerTek announced the termination of the transaction, it surprised the outside world. Since the announcement of the news, its stock price has fallen for three consecutive trading days, with a cumulative decline of 8.98% during the period. It didn't start to recover until October 21.
Voluntarily Jumping Ship?
GoerTek has a psychological shadow about being tied to Apple.
In 2022, the incident of GoerTek being kicked out of the supply chain of AirPods Pro 2 not only caused its stock price to evaporate hundreds of millions of yuan, but also led to poor annual performance in 2023.
According to GoerTek's annual financial report for 2023, during the reporting period, the company's operating income was RMB 98.574 billion, a year-on-year decrease of 6.03%; the net profit attributable to shareholders of the listed company was RMB 1.088 billion, a year-on-year decrease of 37.8%; and the non-recurring profit and loss net profit was RMB 860 million, a year-on-year decrease of 47.16%.
Compared with other Apple supply chain enterprises, GoerTek's accumulation in the AR field may alleviate the anxiety of Apple supply chain enterprises. During the previous VR wave, GoerTek was the core supplier of the VR head-mounted display Oculus Quest 2. Subsequently, GoerTek became the core/exclusive contract manufacturer of many VR leading manufacturers such as Sony and Pico. According to a research report from Zhongtai Securities, as of 2021, GoerTek's market share in the high-end VR/AR whole-machine contract manufacturing field was close to 80%.
Product promotion picture of Oculus Quest 2
To some extent, it was the orders from GoerTek in the high-end VR/AR whole-machine contract manufacturing field that prevented the situation of being kicked out of the Apple supply chain from further deteriorating.
Later, although GoerTek regained its position in the Apple supply chain and obtained corresponding orders, reducing its dependence on Apple has been put on the company's agenda.
According to the 2024 annual report, among the nine R & D projects being promoted by GoerTek, at least four are related to AR and AI glasses.
In September this year, GoerTek was promoting the equity acquisition of Shanghai Aolai by its subsidiary GoerTek Optics. According to the subsequently disclosed plan, GoerTek Optics intends to obtain 100% equity of Shanghai Aolai through a directional capital increase and share expansion method with a registered capital of RMB 530 million.
After the completion of the transaction, GoerTek Optics will hold 100% equity of Shanghai Aolai, and GoerTek's shareholding ratio in GoerTek Optics will decrease from 56.6560% to 37.7707%. This move aims to strengthen the competitiveness in the field of wafer-level micro-nano optical devices and support the development of businesses such as AI smart glasses and AR augmented reality.
GoerTek said that this transaction can achieve complementary advantages between GoerTek Optics and Shanghai Aolai, significantly enhance the competitive advantages in fields such as optical waveguides, relieve the financial pressure at the same time, accelerate the formation of mature production capacity, and seize the market opportunity.
On the evening of August 8, GoerTek invested heavily, $100 million (RMB 718.42 million), through its subsidiary to make a cross-border investment in British Micro-LED giant Plessey. Micro-LED is generally regarded as the ultimate solution for the next-generation display technology and also a technological high ground that must be conquered to develop consumer-grade AR glasses.
Almost at the same time when GoerTek terminated that acquisition, the official website of the People's Government of Pudong New Area, Shanghai, released an announcement on the design plan and planning of the GoerTek International Innovation Center project.
The announcement clearly stated that the project will be constructed and implemented by Shanghai GoerTek Technology Development Co., Ltd., a subsidiary of GoerTek, a listed company under the GoerTek Group.
The operations of advancing in AR and retreating from Apple may have shown GoerTek's true attitude.
Encountering Apple Again
In 2025, it has almost become the "year of capital operation" for Apple supply chain enterprises.
Many Apple supply chain giants, including GoerTek, have been frequently conducting capital operations.
GoerTek Microelectronics, a subsidiary of GoerTek, is striving for an IPO on the Hong Kong Stock Exchange. The company submitted a listing application to the Hong Kong Stock Exchange in July this year, which was the second time it submitted the form this year. China International Capital Corporation, CITIC Construction Investment International, China Merchants Bank International, and UBS Group are the joint sponsors.
The prospectus shows that from 2022 to the first three months of 2025, GoerTek Microelectronics' revenues were RMB 3.121 billion, RMB 3.001 billion, RMB 4.536 billion, and RMB 1.12 billion respectively; the annual profits during the same period were RMB 326 million, RMB 289 million, RMB 309 million, and RMB 116 million respectively.
On August 18, Luxshare Precision officially submitted a listing application to the Hong Kong Stock Exchange, planning to raise more than $1 billion. The prospectus clearly states that one of the uses of the raised funds is to "invest in high-quality targets in the upstream and downstream industries or related industries".
Before submitting the form, Luxshare had carried out a series of dazzling mergers and acquisitions: In March, it acquired the ODM business of Wens Technology for RMB 4.389 billion, expanding from pure "contract manufacturing" to upstream product integration; even earlier, it spent 525 million euros to acquire German century-old automotive wiring harness manufacturer Leoni.
On July 9, Lens Technology was officially listed on the Hong Kong Stock Exchange, raising HK$4.768 billion.
The above Apple supply chain enterprises are all using Hong Kong, an international capital platform, to find a "second growth curve" outside of Apple. Fields such as automotive electronics, communications and data centers, and AR are all new paths they are trying to transform into.
Taking Luxshare Precision as an example, at least in terms of business composition, this company is exploring fields with a relatively low degree of association with Apple. Luxshare Precision's financial report shows that the compound annual growth rates of its automotive electronics and communications and data center business lines are as high as 49.6% and 19.6% respectively.
In contrast, although GoerTek seems to be increasing investment in optical technologies such as AR to stay away from Apple on the surface, there is a possibility that it will circle back to the Apple supply chain.
Mark Gurman of Bloomberg, who has been following Apple for many years and has extensive contacts within Apple, recently revealed that Apple is shifting its R & D focus from the Apple Vision Pro to the smart glasses track. It has even suspended the development of the lightweight head-mounted display and redeployed the core team resources. Its first product, Apple Glass, is planned to be released in 2026 and officially launched in 2027.
After going around in circles, GoerTek has encountered Apple again in the AR track. After all, GoerTek is the contract manufacturer of Apple's head-mounted display products.
Moreover, Apple really "offers a lot".
An executive of an Apple supplier once revealed that although the profit from Apple's orders may not be the highest, Apple will definitely provide suppliers with reasonable profits and will not squeeze the supply chain to cause a decrease in product quality. At the same time, in the industry's view, Apple's orders are a relatively stable source of income, and other "non-Apple supply chain" suppliers face greater pressure.
In addition, Apple's management and innovation capabilities in the supply chain, as well as the industry benchmark effect of entering the "Apple supply chain" and the recognition of the capital market, can all bring benefits beyond orders.
However, Apple is reluctant to accept suppliers intervening as "solution providers", while all kinds of capital operations by GoerTek are aimed at becoming a solution provider.
One doesn't want to be coerced by downstream suppliers, and the other doesn't want to be controlled by the upstream. With a market share of over 70% in the VR/AR contract manufacturing field and an expected share of over 60% in the AI glasses contract manufacturing, this is GoerTek's confidence to compete with Apple in the future.
But Apple is always good at cultivating suppliers. In the same link, Apple usually cooperates with more than two suppliers. Even if one of them may be small in scale, Apple provides technology and a certain amount of orders in the early stage to quickly form a scale, thus restricting the leading enterprises in the track.
To some extent, the rise of BOE in the OLED panel field is not only due to its own continuous efforts to overcome technological difficulties but also related to Apple's conscious efforts to prevent Samsung from monopolizing the market.
It can be predicted that there will surely be a game between Apple and GoerTek in the future AR supply chain field.
This article is from the WeChat public account "Source Byte". Author: Source Byte. Republished by 36Kr with authorization.