According to Nikkei Asia
, Apple is looking to change the location where it produces its true wireless AirPods earbuds. The report says that Apple has asked suppliers to move some production of AirPods and Beats headphones to India. Just about a week ago, it was disclosed that Apple has moved some iPhone 14 production to India
where Apple contract manufacturer Foxconn has a manufacturing facility.
Foxconn is planning to make Apple AirPods in India
The report says that Foxconn has been making preparations to assemble Beats headphones in its Indian facility and is planning on producing AirPods in the same plant. Chinese company Luxshare Precision Industry, an important member of Apple’s supply chain, is also planning to produce AirPods in India. The Nikkei report states that Luxshare might not be ready to immediately produce AirPods in India since it is focusing on its factory in Vietnam which turns out AirPods.
Apple is looking at moving some AirPods production to China
Apple has been looking to move much of its production out of China just in case the relationship between the U.S. and China gets even worse than it is now. Any deterioration between the two powers could lead the U.S. to completely block imports from the country. Apple started taking a serious look at moving production out of China a few years ago when the U.S. imposed import taxes on shipments from China which forced Apple
to decide between raising prices to cover the additional tax or eating the tax itself cutting into its profit margins.
With increasing tensions between the U.S. and China (which also throws the future independence of Taiwan-based Apple chip manufacturer TSMC into question), and the return of COVID-19 in China, Apple has been looking at India, Vietnam, and Mexico as potential areas where it can manufacture its devices. Of course, any such area must have access to a supply chain that can supply parts in the quantity and quality that Apple needs as well as have a workforce able to man assembly lines.
So far it would appear that Apple’s initiative to build more iPhone models in India is paying off. In the five months since April, Apple has exported from India more than $1 billion worth of iPhone units. For the year ending March 2023, Apple could export $2.5 billion worth of iPhones from India.
India is the second largest smartphone market in the world after China but before the United States. However, its position as a developing country makes pricing extremely important. Apple originally started making older models in India to prevent it from tacking on an import tax that India charges on iPhone models imported from China. Building more iPhones domestically also syncs with Indian Prime Minister Narendra Modi’s “Make in India” campaign.
Other options for Apple besides India are Vietnam and Mexico
Previously, Apple focused on producing older models in India. For example, during the spring of 2019, while the world was enjoying the iPhone XS, iPhone XS Max, and the iPhone XR, India was producing “the incredible iPhone 6s”
as the phone was being advertised in the country, priced at the equivalent of $383. But in India Apple has gone from producing older handsets for the domestic market to manufacturing current models for global distribution.
It is to Apple’s advantage to make any manufacturing moves out of China piecemeal just in case there are some problems. What are the kinds of problems that could develop? Apple might have a harder time sourcing parts and components from a new supply chain. It might find it harder to find properly trained assembly line workers and keep them showing up at the factories every working day. And there are other things to be concerned with including the ability to have products quickly packaged and shipped for distribution worldwide.
Vietnam has been an up-and-coming region for tech manufacturing for firms like Samsung, Google
, and Apple. Foxconn also has facilities in the country. Apple currently manufactures some iPad tablets and AirPods in Vietnam and we wouldn’t be surprised to hear that some iPhone production is moving there as well. This past August, Luxshare, and Foxconn started testing production of the Apple Watch in Northern Vietnam.