BYD’s Acquisition of Jabil’s China Factory: Expanding Beyond iPhone Casings into EMS Orders

　　Last month, the primary iPhone casing supplier, American company Jabil, announced that it had reached a preliminary agreement with China’s prominent EMS (Electronic Manufacturing Services) firm, BYD, to sell its Mobile Business Unit for $2.2 billion. The completion of the subsequent transaction will depend on due diligence findings and final agreement terms.

　　AMEYA360 analysis reveals that as Jabil’s main focus in its Mobile Business Unit is iPhone casing manufacturing, the successful conclusion of this deal would leave iPhone casing supply primarily in the hands of Chinese and Taiwanese manufacturers, potentially bolstering China’s position in the supply chain.

　　Furthermore, BYD’s acquisition of Jabil’s China Metal Business not only marks its formal entry into the iPhone supply chain, expanding its presence, but also signals its aspirations to become a supplier in the iPhone assembly business.

　　Jabil’s main production facilities for its Mobile Business Unit are located in Wuxi and Chengdu, China. Wuxi primarily handles iPhone aluminum frame manufacturing, while Chengdu focuses on stainless steel components. This year, the iPhone 15 Pro features a titanium alloy frame for the first time, and Jabil is a key supplier for this component.

　　In terms of operational performance, Jabil’s Wuxi facility, due to its smaller scale compared to Foxconn and Lens Tech, and lower product prices, has underperformed expectations. Conversely, Chengdu, responsible for high-end metal components, has superior technical capabilities and better performance.

　　Considering Jabil Group’s global footprint and the configuration of its key customer supply chains, the company had been seeking a buyer for some time. Initially, Luxshare was a contender in the acquisition, but a consensus on the purchase price was not reached, leading BYD to secure the deal at a higher price.

　　AMEYA360 believes that BYD’s acquisition presents an opportunity to replicate Lens Tech’s experience in acquiring the Catcher’s Taizhou factory in 2020, becoming a direct supplier of iPhone casings. Given Jabil’s involvement in both high-end and low-end iPhone casing businesses, BYD might even be in a position to directly compete with Foxconn for high-end orders. This move would make it difficult for Lens Tech, which still lacks a high-end product line and advanced manufacturing processes, to join the ranks of high-end product suppliers.

　　In the long term,AMEYA360 believes that BYD, which is already an iPad EMS supplier, aims to leverage its position in critical components to venture into iPhone EMS business in the future, expanding its EMS business footprint.