“Chinese companies are getting pretty competitive for iPhone assemblers. China is doing quite well in pretty much everything, except semiconductors,” Kirk Yang, chairman and CEO of Kirkland Capital, told CNBC’s “Squawk Box Asia” Friday.

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More mainland Chinese electronics manufacturing companies are set to take away market share from Taiwanese counterparts such as Foxconn and Pegatronsaid an investment fund manager.

“Chinese companies are getting pretty competitive for iPhone assemblers. China is doing quite well in pretty much everything, except semiconductors,” Kirk Yang, chairman and CEO of Kirkland Capital, told CNBC’s “Squawk Box AsiaFriday.

“So that’s why eventually, you’re going to see more and more Chinese companies taking market share away from Taiwanese electronic companies,” Yang added.

appleFoxconn’s largest supplier, also known as Hon Hai, is facing competition from China’s Luxshare, which was reportedly awarded a contract to produce premium iPhone models in China,

That comes after Foxconn posted record unaudited revenue in 2022 and reported that output at its iPhone plant in China had “basically returned to normal”,

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Luxshare has been producing a small quantity of the iPhone 14 Pro Max model at its Kunshan plant, the Financial Times reportedas Foxconn’s Zhengzhou factory faced Covid restrictions and labor unrest last year.

Founded in 2004 by a former Foxconn worker, Luxshare makes connector cables for the iPhone and MacBook, and also manufactures AirPods.

Yang added that with China-Taiwan geopolitical tensions, Taiwanese companies on the mainland have seen a lot of pressure in the last five years. “A lot of them are moving out of China,” Yang said.

That’s why Apple has to diversify, he said, adding that the US-China tech war is also prompting companies to move even faster out of mainland China.

Furthermore, Chinese companies such as Luxshare have the Hong Kong advantage, Yang said.

“They can probably hire people [more easily than non-Chinese companies] and get better tax incentives. After local companies learn how to make products in a similar quality, at a cheaper price, they will be taking market share.”

In mid-2021, Nikkei Asia reported that mainland China overtook Taiwan to become Apple’s biggest source of suppliers,

Hon Hai has 'no choice' but to offer bonuses to retain workers in China: Financial services firm

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