Introduction: On one hand, the solid performance of its core business, and on the other, the vast potential of its optical module business, have propelled Luxshare Precision's valuation to surpass the RMB 500 billion milestone.

Li Ping/Author Lishang Business Review/Production

1 Countdown to Hong Kong Listing Begins

Following Blue Technology, another "Apple supply chain" giant is set to list on the Hong Kong Stock Exchange.

On June 23, the Hong Kong Stock Exchange website revealed that Luxshare Precision, a consumer electronics manufacturing giant, had passed its listing hearing and updated its prospectus, marking the final stage of its Hong Kong IPO process.

Public information shows that as early as July 2025, Luxshare Precision's board of directors approved resolutions related to an overseas listing, subsequently advancing all preparatory work for the Hong Kong listing. On August 18 of the same year, Luxshare Precision formally submitted its H-share listing application materials to the Hong Kong Stock Exchange and updated its application on February 27, 2026.

According to Frost & Sullivan, based on 2025 revenue, Luxshare Precision ranks fifth globally and first in mainland China in the global PIMS (Precision Intelligent Manufacturing Solutions) industry, leading in major business lines such as consumer electronics, automotive electronics, communications, and data centers. The company ranks second globally and first in mainland China in the consumer electronics components and modules PIMS market, with a global market share of 11.2%.

Financial data shows that in 2025, Luxshare Precision achieved revenue of RMB 332.344 billion, up 23.64% year-on-year, with net profit attributable to shareholders of RMB 16.6 billion, up 24.2% year-on-year. By business segment, its traditional consumer electronics business generated revenue of RMB 264.266 billion, up 13.37% year-on-year, accounting for 79.52% of total revenue. Automotive electronics, communications, and data center businesses achieved revenue of RMB 39.255 billion and RMB 24.568 billion, up 185.34% and 33.81% year-on-year, respectively. Their combined revenue share exceeded 20% for the first time, indicating that Luxshare Precision has initially formed a triple-drive model of "consumer electronics + automotive electronics + data centers."

Similar to its strategy in the Apple supply chain, Luxshare Precision has adopted an external M&A approach in expanding into automotive electronics and data center businesses, leading to a continuous rise in its debt levels. By the end of 2025, Luxshare Precision's total liabilities exceeded RMB 200 billion, up more than RMB 60 billion from the previous year, with interest-bearing liabilities exceeding RMB 100 billion, both reaching record highs.

According to the latest report by IFR, a Reuters-affiliated media outlet, Luxshare Precision plans to raise between USD 2 billion and USD 3 billion and aims to list in Hong Kong as early as July. According to the prospectus, Luxshare Precision plans to sell approximately 441 million ordinary shares in its H-share offering, with proceeds after deducting issuance expenses earmarked for: expanding production capacity and upgrading existing bases, focusing on global capacity expansion in automotive electronics and consumer electronics; investing in technology R&D to improve manufacturing processes and enhance smart manufacturing capabilities; investing in high-quality targets in upstream and downstream industries or related sectors; repaying some existing interest-bearing bank loans; and supplementing working capital and general corporate purposes.

Notably, on the same day Luxshare Precision passed its Hong Kong listing hearing, Goldman Sachs publicly raised its stock rating in a latest research report, significantly increasing its 12-month target price for Luxshare Precision from RMB 50.15 per share to RMB 106 per share, representing a potential upside of 52.8%. Analysts such as Verena Jeng stated in the report that from 2025 to 2028, Luxshare Precision's revenue is expected to grow at a CAGR of 22%, reflecting expectations of strong growth in its data center business, automotive electronics, and overseas OEM customer expansion.

On June 24, the day after Luxshare Precision updated its post-hearing prospectus, its stock price rebounded quickly after an early dip, surging in the afternoon and hitting the daily limit before opening, closing up 8.2% with a total market cap exceeding RMB 550 billion. Clearly, secondary market investors have already voted in favor of Luxshare Precision's Hong Kong listing.

2 Initial Success in Diversifying Away from Apple

In the A-share market, Luxshare Precision has long been known as the "king of the Apple supply chain."

Public information shows that Luxshare Precision, founded in 2004, initially engaged in computer cable business. Its founder, Wang Laichun, was among the first 150 employees hired by Foxconn's Shenzhen factory in 1998. In 2010, Luxshare Precision successfully listed on the Shenzhen Stock Exchange, raising RMB 1.261 billion. After the listing, Luxshare Precision acquired stakes in "Apple supply chain" companies such as Kunshan LianTao Electronics, successfully entering Apple's supply chain. Subsequently, by continuously expanding from single components to modules and then to whole system assembly, Luxshare Precision gradually grew into a key supplier in Apple's supply chain.

As the main contract manufacturer for Apple AirPods, Luxshare Precision holds over 70% of the AirPods manufacturing share and handles full-process production including acoustic module assembly and whole machine testing (finished product testing). Meanwhile, Luxshare Precision is the second-largest contract manufacturer for iPhones, with a market share of approximately 15%-20%. Additionally, Luxshare Precision provides precision structural components for the Apple Watch Series 10 and is the exclusive assembler of Apple's first head-mounted display, Vision Pro, responsible for key processes such as optical modules and sensor integration.

With a steady influx of Apple orders, Luxshare Precision achieved steady growth in business performance. Data shows that from 2015 to 2024, Luxshare Precision's revenue surged from RMB 10.1 billion to RMB 268.8 billion, a more than 25-fold increase in 10 years. Among them, revenue from its largest business, consumer electronics, grew from RMB 4.4 billion to RMB 233.1 billion, a more than 50-fold increase in 10 years.

However, while achieving rapid development through its cooperation with Apple, Luxshare Precision inevitably developed a severe "major customer dependency." Data shows that from 2021 to 2024, revenue from Apple accounted for over 70% of Luxshare Precision's total revenue for four consecutive years, earning it the label of an "Apple contract manufacturer" among investors.

Against the backdrop of ongoing U.S.-China trade disputes, Luxshare Precision, labeled as part of the "Apple supply chain," is not favored by A-share investors, with its valuation under continuous pressure. In April 2025, the escalation of the U.S.-China trade war significantly impacted the consumer electronics sector, with "Apple supply chain" stocks led by Luxshare Precision experiencing a sustained plunge. Data shows that from April 2 to April 9, 2025, Luxshare Precision's stock price fell nearly 30% in five trading days, at one point dropping below a market cap of RMB 200 billion.

On the other hand, due to the low gross margins of businesses such as iPhone assembly, Luxshare Precision's overall profitability has declined significantly in recent years. From 2020 to 2024, Luxshare Precision's gross profit margin fell from 18.09% to 10.41%, showing a clear year-by-year decline. Clearly, the narrowing profit margins of its core business have also become a key factor weighing on Luxshare Precision's stock price.

In recent years, to reduce its over-reliance on Apple, Luxshare Precision has continuously expanded into emerging businesses such as automotive electronics, communications, and data centers, aiming to open up a second growth curve. In the automotive sector, Luxshare Precision focuses on core electronic energy transmission and signal interaction in vehicles, with products covering high- and low-voltage wiring harnesses, high-speed wiring harnesses, and high-speed connectors for entire vehicles, extending to product systems such as smart cockpits, ADAS domain controllers, AR-HUDs, and multi-in-one powertrains. Additionally, Luxshare Precision has established a joint venture with Chery Automobile, setting a goal of becoming a top-10 global Tier 1 supplier.

In the communications and data center sectors, Luxshare Precision has built a comprehensive solution based on "three core systems (high-speed optical-electrical interconnects, power management, thermal management)" and "two key dimensions (board-level interconnects, rack-level interconnects).". In the communications network field, Luxshare Precision focuses on core network equipment such as base station antennas and RF units; in the data center field, it focuses on core modules such as high-speed copper/optical interconnects, thermal management, and power management, providing end-to-end solutions for AI computing clusters.

Previous annual report data shows that in 2025, Luxshare Precision achieved revenue of RMB 332.344 billion, up 23.64% year-on-year. By business segment, automotive electronics, communications, and data center businesses achieved revenue of RMB 39.255 billion and RMB 24.568 billion, accounting for 11.81% and 7.39% of total revenue, respectively, with the consumer electronics business share dropping below 80% for the first time. Additionally, revenue from Apple, its largest customer, accounted for 57% of total revenue, indicating initial success in its "de-Applefication" strategy.

3 Optical Modules Drive Valuation Reshaping

While promoting revenue diversification, Luxshare Precision's expansion into emerging businesses such as automotive electronics has also improved its overall gross profit margin to a certain extent. According to its Hong Kong prospectus, in 2025, the gross profit margins of Luxshare Precision's communications and data center, and automotive electronics businesses were 18.1% and 15.6%, respectively, significantly higher than the 10.3% gross profit margin of its consumer electronics business during the same period.

Benefiting from the increased share of high-margin businesses, Luxshare Precision's overall gross profit margin reached 11.6% in 2025, up 1.5 percentage points year-on-year, initially reversing the trend of declining gross margins in previous years.

In terms of revenue share, Luxshare Precision's automotive electronics business has exceeded 10% of total revenue and is viewed by many investors as its second growth curve. However, compared to automotive electronics, the gross profit margin of Luxshare Precision's communications and data center business is higher. Especially against the backdrop of strong global demand for AI computing power, the data center business, centered on optical modules, copper interconnects, and optical interconnects, has become the biggest highlight for Luxshare Precision's future.

As early as 2020, Luxshare Precision began layout (layout) optical module R&D, achieving mass production of 400G optical modules in 2023 and launching 800G optical module products. To date, Luxshare Precision's 800G optical modules have achieved mass production and shipment. It is reported that Luxshare Precision's 800G optical module products have passed compatibility tests with switches from major overseas brands such as Nvidia, Arista, and Juniper, and demonstrated leading bit error performance compared to competitors in horizontal evaluations for 800G solutions by key customers.

In April 2025, Luxshare Technology showcased a 1.6T optical module optical-copper interconnect full-link solution at OFC 2025, taking the lead in implementing 1.6T optical modules, which are currently undergoing customer validation. In terms of frontier technology layout (layout), Luxshare Precision continues to advance R&D of frontier optical interconnect technologies such as LPO/CPO and has preemptively layout (layout) R&D of 5nm-related products.

While continuing to focus on next-generation AI optical interconnect technologies, Luxshare Precision has also achieved breakthroughs in thermal management, power management, and other areas. In thermal management, Luxshare Precision's self-developed microchannel thermal management products achieved mass production in 2025; in power management, its 800-volt system products have been deployed in key customer projects and commercialized.

Some analysts believe that with the large-scale construction of data centers worldwide, Luxshare Precision's data center business volume may see substantial growth in 2026-2027. In this regard, Goldman Sachs pointed out in a latest research report that due to Luxshare Precision's commercialization of layout (layout) in high-speed copper interconnects, optical modules, and thermal management, its telecommunications and data center business CAGR will reach 67%, with sales revenue from this business accounting for 19% of total revenue by 2028.

However, compared to leading companies such as Zhongxi Jichuang and Xinyi Sheng, Luxshare Precision's optical module business still lags significantly in terms of revenue scale and profitability. In 2025, Luxshare Precision did not disclose specific revenue figures for its optical module business. However, according to Luxshare Precision's statements on interactive platforms, the optical module business accounts for a very small portion of its communications and data center segment, with revenue share of approximately 0.1% in 2025. Luxshare Precision also emphasized that its cooperation with leading North American CSP (cloud service provider) customers in the optical module business is still in the early stages of engagement, and previous market reports claiming that "Luxshare Precision secured 10 million optical module orders from North American customers" are false.

Additionally, from a supply chain perspective, Luxshare Precision's optical module business mainly focuses on supporting manufacturing and system integration, while upstream core technologies such as optical chips and high-speed signal processing remain in the hands of professional optical module manufacturers and upstream chip companies. In comparison, Zhongxi Jichuang has successfully developed key components such as high-precision lasers and microlens arrays, leading to a significant gap in profitability between the two. Data shows that in 2025, the gross profit margin of Zhongxi Jichuang's optical module business reached 42.61%, while the overall gross profit margin of Luxshare Precision's communications and data center business was only 18.4%.

Overall, Luxshare Precision's optical module business is still in its early stages in terms of revenue scale, core technologies, and business models, and has not yet fully emerged. However, this " hazy beauty (vague beauty)" of the optical module business has become the strongest catalyst for Luxshare Precision's valuation surge, igniting bullish sentiment in the capital markets. Meanwhile, Luxshare Precision is actively seizing the current "expectation premium" window in the capital markets to accelerate its Hong Kong listing process, thereby transforming this "vague beauty" into a capital engine supporting its globalization strategy.