(Yicai Global) Oct. 26 -- Hon Hai Precision Industry, better known as Foxconn, has refuted a report that US tech giant Apple’s largest foundry has set up a task force to deal with perceived growing competition from up-and-coming Chinese electronics firm Luxshare Precision Industry.

"We don’t comment on market speculation," Taipei-based Foxconn told Yicai Global. "The news about the work team is not true, and our management hasn’t taken any special action."

Foxconn has created a team to fend off Luxshare’s “growing clout,” Reuters reported earlier today, citing three unidentified sources with knowledge of the matter. Foxconn sees Luxshare as a serious threat to its dominance as an Apple supplier, Reuters said.

The task force, said to be initiated by founder Terry Gou last year, “has been looking into Luxshare’s technology, expansion plan, hiring strategy and whether it is supported by any Chinese government entity,” the report added.

Set up in 2004 by former Foxconn production line worker Wang Laichun, Luxshare bought an iPhone assembly plant in Kunshan, Jiangsu province from Wistron for CNY3.3 billion (USD494 million) in July, putting it on track to being the first mainland Chinese firm to produce iPhones for Apple. It already has a 70 percent share of Apple’s AirPod Pro orders.

That helped to boost the Dongguan-based firm’s net profit by 69 percent to CNY2.5 billion (USD373 million) in the first half, according to the China IRN Research Institute. Revenue soared by the same amount to CNY36.5 billion (USD5.5 billion).

Luxshare’s stock price [SHE: 002475] closed up 1.3 percent today at CNY57.50 (USD8.60), giving it a market capitalization of CNY396 billion (USD59 billion).

Foxconn Chairman Liu Yangwei said in August that it is natural for a company to have more rivals and this can benefit the industry so long as it is benign competition. Foxconn’s client relationships were not built in a day, he said, adding that the firm is making continuous efforts to maintain a leading position in new technologies.

Foxconn’s second-quarter revenue fell 2.8 percent to TWD1.13 trillion (USD39.5 billion) amid the Covid-19 pandemic. The firm expects third-quarter revenue to drop by double-digits as clients postpone new product launches.

Editor: Kim Taylor