Foxconn, a contract manufacturer based in Taiwan, has received an order to produce AirPods for Apple and intends to construct a plant in India for this project.

New AirPods Facility in India

Foxconn is the biggest contract electronics manufacturer and assembler of about 70% of all iPhones. Now, it will become a supplier of AirPods for the first time as a result of the agreement, highlighting the attempts to further shift production away from China.

According to Reuters' insiders, Foxconn would spend over $200 million on its new AirPods manufacturing facility in Telangana, India. The total value of the order for the device was yet unclear.

Foxconn Interconnect Technology, a wholly owned subsidiary of Foxconn, expects to start building a production facility in Telangana in the second half of this year. Commencement of production is set for the end of 2024 at the earliest.

The person familiar with the subject said that Foxconn executives had argued internally for months whether to manufacture AirPods owing to comparatively lower profit margins on assembling the gadget. Eventually, they decided to go forward with the contract to "reinforce engagement" with Apple.

"That way, we are more likely to get orders for their new products," said the insider.

Also Read: Foxconn To Invest $700 Million in New India-based Facility

Shift Away From China

Reuters further reported that Apple initiated the move to establish manufacturing in India. Meanwhile, Foxconn competes with other Taiwanese manufacturers like Wistron and Pegatron for contracts with Apple.

Experts have speculated that Apple has requested Foxconn and other manufacturers to produce AirPods in India. Still, specifics about the company's investment, schedule, and which companies want to establish operations in the nation remain unknown.

Foxconn's largest iPhone manufacturing was interrupted by the severe Covid-19 restrictions last year, prompting Apple and its major suppliers to move production out of China. Also, it is not questionable if they want to protect their company from the economic fallout of the escalating trade war between China and the US.

To better satisfy customer demand and lessen its dependency on China's operations, Foxconn said on Wednesday, Mar. 15, that it would increase investment outside China.

The Market Competition

How Foxconn's manufacturing strategy would affect existing AirPod suppliers like Luxshare Precision Industries was not entirely apparent.

Another supplier, Goertek, said in November 2022 that an international customer had requested it halts assembly work for a smart acoustic device. Analysts at the time identified the product as AirPods Pro 2 and that this decision might result in a loss of up to 3.3 billion yuan (US$480 million) in revenue.

Since the first reporting of the news by Reuters, Foxconn's stock price has increased by about 9%, which offsets a loss of 2.2%. Foxconn's stock price increased 0.5%, while the Taipei benchmark fell 1.1%.

Also Read: Foxconn Introduces the New iPhone Division Head, Michael Chiang