TAIPEI - Taiwanese contract manufacturer Foxconn has won an order to make AirPods for Apple and plans to build a factory in India to produce the wireless earphones, two people with direct knowledge of the matter told Reuters.
The deal will see Foxconn, the world’s largest contract electronics maker and assembler of around 70 per cent of all iPhones, become an AirPods supplier for the first time and underlines efforts by the key Apple supplier to further diversify production away from China.
AirPods are currently made by a range of Chinese suppliers.
One source said Foxconn will invest more than US$200 million (S$270 million) in the new AirPods plant in the southern Indian state of Telangana.
It was not immediately clear how much the AirPods order would be worth.
The person said Foxconn officials had debated internally for months about whether to assemble AirPods due to relatively lower profit margins on making the device, but ultimately opted to go ahead with the deal to “reinforce engagement” with Apple.
“That way, we are more likely to get orders for their new products,” the person said.
The decision to set up production in India was requested by Apple, according to the source.
Foxconn vies with Taiwanese rivals such as Wistron Corp and Pegatron Corp to win more orders from Apple, the world’s most valuable company.
It plans to start construction of a manufacturing facility in Telangana in the second half of 2023 and begin production by the end of 2024 at the earliest, the person said.
Apple and its key suppliers have been shifting production away from China, where strict Covid-19 curbs disrupted Foxconn’s biggest iPhone factory in 2022.
They are also seeking to avoid any potential blow to business from mounting US-China trade friction.
Foxconn said on Wednesday it would ramp up investment outside China to meet customer demand and lower its reliance on China for production.
It was not immediately clear whether Foxconn’s production plan would have any impact on current AirPods suppliers, including Luxshare Precision Industry.
Goertek, another supplier, said in November an overseas client had asked it to suspend assembly work for a smart acoustic product, which analysts at the time identified as AirPods Pro 2, and the suspension would hit revenue by up to 3.3 billion yuan (S$646 million). REUTERS
