Foxconn, the world’s largest contract electronics maker and assembler of around 70% of all iPhones, has won an order to produce AirPods for Apple Inc and plans to build a factory in India to manufacture the wireless earphones. According to two people with direct knowledge of the matter, the move highlights Foxconn’s efforts to diversify production away from China.
Currently, AirPods are made by a range of Chinese suppliers. The deal will mark the first time Foxconn will become an AirPod supplier, and the order’s worth has not been disclosed yet.
One source stated that Foxconn will invest over $200 million in the new India AirPod plant in the southern Indian state of Telangana. However, Foxconn officials have internally debated for months whether to assemble AirPods due to lower profit margins on making the device. But ultimately, the company decided to proceed with the deal to “reinforce engagement” with Apple.
The move is an important step for Foxconn, which has been under pressure to reduce its reliance on China, where it has faced rising labour costs and an ongoing US-China trade war. The new AirPod plant in India will provide Foxconn with a new production base and strengthen its partnership with Apple, which remains its largest customer.
Apple has been looking to diversify its supply chain as well, amid the ongoing trade tensions between the US and China. The company has been shifting its manufacturing operations to other countries, such as India and Vietnam, where labour costs are relatively lower.
Overall, Foxconn’s win of the AirPod order and its plans to build a factory in India is a positive development for the company, which has been seeking to expand its global production base. The move will also benefit Apple, which can reduce its reliance on Chinese suppliers and diversify its production base.