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Taiwanese contract manufacturer Foxconn has won an order to manufacture AirPods Apple and plans to build a factory in India to manufacture the wireless headphones, two people with direct knowledge of the matter told Reuters.
The agreement makes Foxconn, the world’s largest contract electronics manufacturer and assembler of around 70% of all iPhones, an AirPod supplier for the first time and underscores the key Apple supplier’s efforts to further diversify production away from China. AirPods are currently manufactured by a number of Chinese suppliers.
According to a source, Foxconn will invest more than $200 million in the new India AirPod factory in the southern Indian state of Telangana. It wasn’t immediately clear how much the AirPod order would be worth.
The person, who asked not to be known because the matter was not yet public, said Foxconn officials had been debating internally for months whether AirPods should be assembled due to relatively lower profit margins in manufacturing the device, but ultimately decided to back the deal continue to “intensify engagement” with Apple.
“That way, we’re more likely to receive orders for their new products,” the person said.
The decision to set up manufacturing in India was requested by Apple, according to the source.
Foxconn competes with Taiwanese rivals such as Wistron And Pegatron Win more business from Apple, the world’s most valuable company.
a subsidiary, Foxconn connection technologyplans to start construction of a manufacturing facility in Telangana in the second half of this year and start production in late 2024 at the earliest, the person said.
Shares in the Foxconn unit rose nearly 9% after Reuters first reported the news, reversing an earlier 2.2% loss. Foxconn itself rose 0.5%, while the Taipei benchmark slipped 1.1%.
A second person with direct knowledge of the matter, who also declined to be identified because the matter was not yet public, said the Foxconn subsidiary will manufacture AirPods in India without giving further details.
Analysts have previously said that Apple has asked suppliers like Foxconn to manufacture AirPods in India, but details such as the amount of investment, timing and which suppliers have manufacturing plans in the country have not been disclosed.
Foxconn declined to comment. Apple did not immediately respond to a request for comment.
Apple and its main suppliers have been relocate production away from China, where strict Covid-19 curbs disrupted Foxconn’s largest iPhone factory last year. They are also trying to avoid potential damage to business from escalating trade tensions between China and the US.
Foxconn said on Wednesday Increase in investment outside of China to meet customer demand and reduce dependence on China for production.
It wasn’t immediately clear if Foxconn’s production schedule would impact current AirPod suppliers, including Luxshare precision industry.
Luxshare did not immediately respond to a Reuters request for comment.
Gortekanother provider, said in November A foreign customer had asked to suspend assembly work for a smart acoustic product analysts then identified as AirPods Pro 2, and the suspension would hurt sales by up to 3.3 billion yuan ($480 million).
Goertek did not respond to a request for comment.
Source : www.cnbc.com