Apple suppliers frequently benefit when Cupertino has a mega-sized hit — and that’s exactly what has happened with the makers of the AirPods. Supplier Luxshare Precision Industry, which manufactures the AirPods for Apple, has seen its stock price triple this year.
In the process it has outperformed every other major stock traded in the Asia-Pacific region. And it’s only going to rely more on the AirPods going forward.
According to a report by Bloomberg, Apple’s wearables business is up 41% in 2019. Credit Suisse analyst Kyna Wong says that AirPods shipments are likely to hit 60 million this year, 90 million in 2020, and 120 million in 2021.
Luxshare is benefitting enormously from this. It is the best former of the year in the MSCI Asia Pacific Index as well as the MSCI China Index. The company usually produces basic tech accessories and components, such as chargers and cables. The AirPods stand out as a higher-value item.
In 2018, AirPods contributed 26% of Luxshare’s revenue. HSBC analyst Frank He thinks that this could grow to as high as 50% in 2020. A recent report suggested that Apple has been Luxshare’s ability to deliver in terms of quantity and quality. Nikkei Asian Review said that Luxshare has a “wolflike” culture that values aggressiveness.
AirPods: Supplier exclusivity may not last
However, Luxshare’s AirPods exclusivity will likely not last. That’s likely due to the massive quantity of AirPods Apple is going to look for in the future. Earlier this week, I wrote about a report claiming that Apple has doubled its monthly AirPods Pro production from 1 million to 2 million units per month.
As a result, rival firms such as GoerTek are upgrading their facilities and trying to win Apple business. Bloomberg says that GoerTek’s own stock price has climbed 184% in 2019 “on the optimism of stronger demand for AirPods.”
A recent study found that AirPods are at the top of US teens’ wish lists this holidays. Shipping times on Apple.com currently suggest that people ordering now likely won’t receive their earbuds until after Christmas.
Source: Bloomberg
