Apple supplier Luxshare, which is responsible for manufacturing AirPods and some iPhone, iPad and Mac components, has been accused by Taiwanese prosecutors of stealing trade secrets from a local supplier and poaching its employees to take orders from Apple. The prosecutor’s office filed charges against 14 people.
Taiwan wants to stop what it sees as “behind-the-scenes and illegal activities by Chinese firms to steal know-how and poach talent that the Taipei government sees as a threat to the island’s technical prowess,” Reuters reported.
After a year-and-a-half investigation, Taiwanese prosecutors determined that Chinese Luxshare targeted Taiwanese competitor Catcher Technology “in order to quickly enter Apple’s production chain and gain orders.”
Luxshare “lured” Catcher’s Chinese research and development team with promises of high salaries and stole the Taiwanese firm’s business secrets, causing them heavy losses, prosecutors said in a statement.
Luxshare did this to be able to “quickly build factories and mass-produce cases for iPhone, iPad and other products,” the statement said.
While neither Luxshare nor Apple have commented on the story, they reported a couple of years ago that Apple was encouraging the Chinese company to expand its business and encroach on Foxconn territory. At that time, Luxshare was only responsible for the production of AirPods.
Now the Chinese company is already making parts for the iPhone 13 and is looking to help with the iPhone 14. In addition, it may soon produce the Apple Watch and is also investing in the production of electric vehicles for the Apple Car, which is rumored.
As Benjamin Mayo of Apple points out, Apple wants to diversify its suppliers because it gives them access to better components at better prices. He noted:
In some cases, Apple has even invested its own money to try and find multiple parts suppliers. In 2018, Apple bought Toshiba Memory to keep the competition in the NAND markets. The company has also invested hundreds of millions of dollars in Japan Display to help the display maker survive and grow production to try and limit Samsung Display’s dominance in the OLED space.
Returning to the Reuters report, Catcher, which makes iPhone and iPad cases, said it “continues to implement and optimize trade secret and intellectual property protection and will investigate anything that violates its rights and interests.”
Taipei prosecutors charged 14 people in connection with the case with breach of trust and using trade secrets for use abroad.
“The department will do its best to investigate such cases in order to support the healthy development of our country’s enterprises and ensure the competitiveness of the national industry,” the prosecutor’s office said.
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