Apple supplier Luxshare accused of stealing secrets by Taiwan authorities

Apple supplier Luxshare, which is responsible for making AirPods and some parts of iPhones, iPads, and Macs, has been accused by Taiwanese prosecutors of stealing commercial secrets from a local supplier and poaching its workforce to win orders from Apple. The prosecutors have charged 14 people.

As reported by ReutersTaiwan wants to stop what it views as “underhand and illegal activities by Chinese firms to steal know-how and poach away talent in what Taipei’s government views as a threat to the island’s tech prowess.”

After a year-and-a-half investigation, Taiwanese prosecutors found that China’s Luxshare had targeted Taiwanese competitor Catcher Technology “in order to quickly enter the Apple production chain to win orders.”

Luxshare “lured” Catcher’s China based research and development team with promises of high salaries and stole business secrets from the Taiwanese firm, causing them big losses, the prosecutors said in a statement.

Luxshare was doing this in order to be able to “quickly build factories and mass produce cases for iPhones, iPads and other products,” the statement said.

While neither Luxshare nor Apple commented on the story, a couple of years ago, 9to5Mac reported that Apple was encouraging the Chinese company to expand its business and encroach on Foxconn’s turf. At the time, Luxshare was responsible for only making AirPods.

Now, the Chinese company already makes parts for the iPhone 13 and is set to help with iPhone 14. In addition, it could soon make Apple Watches while it also invests in EV production for the rumored Apple Car.

As noted by 9to5Mac‘s Benjamin Mayo, Apple wants supplier diversification since it gives access to better quality components at better prices. He noted:

In some cases, Apple has even put up its own money in order to try and secure multiple suppliers for parts. In 2018, Apple bought ownership in Toshiba Memory in order to retain competition in the NAND markets. It has also committed hundreds of millions in investment in Japan Display to help the display manufacturer survive and evolve its manufacturing, to try to limit Samsung Display’s dominance of OLED displays.

Back to the Reuters report, Catcher, which makes iPhone and iPad cases, said “it continues to implement and optimize the protection of trade secrets and intellectual property rights, and will investigate anything that infringes on its rights and interests.”

The Taipei prosecutors charged 14 people in connection with the case for breach of trust and taking commercial secrets for use overseas.

“The department will do its best to investigate such cases to maintain the sound development of our country’s enterprises and ensure the competitiveness of national industries,” said the prosecutors.

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