(Bloomberg) -- Wingtech Technology Co., a Chinese supplier to Apple Inc. and other electronics makers, has agreed to spin off a major piece of its operations after US sanctions threaten to bring heavy losses.
The company signed an agreement to sell its stake in five subsidiaries to Luxshare Precision Industry Co., according to a filing with the Shanghai Stock Exchange on Thursday. Assets in three other Wingtech units will also be divested.
The sale of Wingtech’s product assembly business, which involves assets worth about 4.6 billion yuan ($635 million), would mean a full exit from this market. The shift would let the company focus only on semiconductor operations, a move it took after an “in-depth assessment of the geopolitical environment and business development,” Wingtech said.
The technology firm, based in Jiaxing, Zhejiang, was added to the Commerce Department’s so-called entity list by then-President Joe Biden’s administration in December. The companies on the list are seen as a threat to US national security or foreign policy interests and face restrictions.
This has “impacted the company’s assembly business in terms of procurement, R&D and sales, leading to unfavorable situations such as difficulties in securing new project orders and the loss of existing project orders,” Wingtech said in its statement.
A “significant revenue decline” in the assembly business would occur if the division were kept, the company said. Wingtech had estimated in January a full-year net loss of as much as 4 billion yuan.
Wingtech was added to Apple’s supplier list in 2022. Though the iPhone maker’s latest directory of vendors still lists Wingtech as a provider, things may have already changed. A major client code-named “Customer A” hasn’t placed any order with Wingtech since it was blacklisted by the US, the firm said in another statement to the exchange.
This buyer canceled the 2025 purchase plan for 2.27 million devices, worth 14.5 billion yuan, Wingtech said. According to local media outlet Cailian, “Customer A” was used by Wingtech to refer to Apple. The company received zero orders from other clients since December. In addition, existing orders for 25.4 million devices were scrapped by buyers.
Apple didn’t immediately respond to a request for comment.
Final terms haven’t been set for the proposed deal, which is subject to approval from regulators and shareholders, according to Wingtech.
--With assistance from Mark Gurman, Foster Wong and Olivia Tam.