A factory in India will be built to manufacture Apple’s AirPods by Taiwanese contract manufacturer Foxconn, two people with direct knowledge of the matter told Reuters.
The agreement highlights Foxconn’s ambitions to further diversify manufacturing outside of China, as it will make the company an AirPod supplier for the first time. Foxconn is the largest contract electronics manufacturer in the world and assembles about 70% of all iPhones. Several Chinese manufacturers presently produce AirPods.
According to one source, Foxconn would invest more than $200 million in the new India AirPod plant in the southern Indian state of Telangana. How much the AirPod order would cost was not immediately apparent.
The source, who wished to remain anonymous because the situation had not yet been made public, claimed that Foxconn officials had internally debated for months whether to assemble AirPods due to the relatively lower profit margins on producing the device, but ultimately decided to move forward with the deal to “reinforce engagement” with Apple.
“We are more likely to receive orders for their new products if we do that,” the person stated.
According to the insider, Apple demanded that production be moved to India.
To earn additional orders from Apple, the most valuable corporation in the world, Foxconn competes with Taiwanese rivals like Wistron Corp. and Pegatron Corp.
A subsidiary, Foxconn Interconnect Technologies Ltd., intends to begin building a manufacturing facility in Telangana in the second half of this year and start producing by the end of 2024 at the earliest, the source said.
The Foxconn subsidiary would manufacture AirPods in India, according to a second individual with direct knowledge of the situation, who also declined to be named since the information was not yet out to the public.
Experts have previously claimed that Apple has asked suppliers, including Foxconn, to produce AirPods in India, but specifics about the investment amount, the time frame, and which suppliers have manufacturing ambitions in the nation have not been made public.
Foxconn opted against commenting. An inquiry for comment was not immediately answered by Apple.
With last year’s disruption of Foxconn’s largest iPhone manufacturing by COVID-19 restrictions, Apple and its major suppliers have begun transferring production away from China. Furthermore, they want to prevent growing Sino-American trade tension from harming their company.
To meet customer demand and reduce its dependency on Chinese manufacturing, Foxconn announced on Wednesday that it would increase investment outside of China.
It was unclear at the time whether Foxconn’s production strategy would affect the present AirPod suppliers, such as Luxshare Precision Industries.
An inquiry for comment from Reuters did not receive a prompt response from Luxshare.
Another supplier, Goertek Inc., reported in November that an overseas client had asked it to halt assembly work for a smart acoustic product, which analysts at the time identified as AirPods Pro 2. The supplier estimated that the suspension would reduce revenue by up to 3.3 billion yuan ($480 million).
