SUMMARY
The Taiwanese contract manufacturer has won an order for AirPods for the first time and plans to manufacture it in Telangana
Foxconn will start the construction of a manufacturing facility in the southern state in the second half of 2023 and aims to begin production by the end of 2024
Jabil, one of the many Apple suppliers, has already started manufacturing AirPods components in India and shipping them to China and Vietnam
Taiwan-based contract manufacturer Foxconn has reportedly won an order from Apple to make AirPods for the Cupertino-based tech giant and plans to set up a facility in Telangana to manufacture the wireless headphones.
Foxconn manufactures 70% of all iPhones globally, but this will be the first time when it will supply AirPods to Apple, news agency Reuters reported citing sources.
The move highlights the efforts made by Foxconn to diversify its production away from China amid increasing geopolitical tensions between the US and China.
Reuters cited a source as stating that Foxconn will invest over $200 Mn in Telangana to set up a facility to manufacture AirPods. However, it was not immediately clear what would be the production volume or the order value.
Foxconn Interconnect Technology Ltd, a subsidiary of the Taiwanese contract manufacturer, plans to start construction of the manufacturing facility in Telangana in the second half of 2023 and aims to begin production by the end of 2024, the source was cited by Reuters as saying.
The move comes after months of discussions at Foxconn if it should even take up AirPods manufacturing, as the device comes with relatively low profit margins compared to iPhones.
Foxconn ultimately decided to go ahead with the deal to “reinforce engagement” with Apple. “That way, we are more likely to get orders for their new products,” a source was cited as saying. The source added that Apple specifically requested Foxconn to set up shop in India.
Earlier, it was reported that Apple directed its suppliers to move some of the manufacturing of AirPods and Beats By Dre to India to reduce reliance on China for its supply chain.
Jabil, one of the many Apple suppliers, has already started manufacturing AirPods components in India and shipping enclosures for AirPods to China and Vietnam.
India: Apple’s Factory
India has become one of Apple’s most important markets and an emerging manufacturing hub over the last couple of years or so. The world’s most valuable company recently conducted a major international management reshuffle to make India a separate sales region, underlining the surging importance of the country for the iPhone maker.
India has emerged as a major alternative to China for Apple to manufacture in, and it has been directing its suppliers to set up shop in India. India, on its part, has been giving room to Apple, approving 14 Chinese suppliers recently.
In January, Union Minister Piyush Goyal said Apple is looking to ramp up production in India to account for 25% of its total output.
This has paid dividends for India, as in February, the Cupertino-based tech giant became the largest provider of blue-collar jobs in India’s electronics sector, having created 4 Lakh direct and indirect jobs in the segment.
Apple exported iPhones worth $1 Bn from India in December 2022, or 81% of total smartphone exports by value during the month from India.
Foxconn has been one of Apple’s most proactive manufacturers when it comes to manufacturing in India. Earlier this month, media reports suggested that the Taiwanese contract manufacturer was set to invest between $700 Mn-$1 Bn in India.
It is in the process of setting up a 300-acre manufacturing facility in Bengaluru, along with significant investments in Telangana.
