For the first time, Apple is requesting suppliers to shift some AirPods and Beats headphone production to India, a gain for the South Asian nation as it strives to climb the global supply chain.
The decision is part of Apple’s ongoing shift away from China, as the company seeks to reduce the risk of supply chain disruptions caused by the country’s tough zero-COVID policy and tensions with the United States. According to three sources familiar with the situation, Apple has been in discussions with a number of its suppliers about increasing manufacture in India, including critical acoustical devices, as early as next year.
In response, iPhone assembler Foxconn is planning to manufacture Beats headphones in the nation and hopes to eventually create AirPods as well, according to two people with direct knowledge of the situation.
Luxshare Precision Industry and its affiliates, which already manufacture AirPods in Vietnam and China, plan to assist Apple in producing the popular wireless earphones in India, according to sources. However, Luxshare is currently focusing on its Vietnamese AirPods operations and may be slower than its competitors in establishing major production of Apple products in India, according to one of the sources.
AirPods were one of the first Apple products to be mass-produced outside of China, with production transferring to Vietnam in 2019 as a result of the trade war between the United States and China. More than 70 million units are supplied each year, ranking second only to the iPhone in terms of shipment volume among Apple products. According to insiders, the majority of Beats manufacturers have also transferred to Vietnam since last year.
Bringing AirPods and Beats to India would expand Apple’s manufacturing foothold in the nation, following the recent disclosure that the newest iPhone is already manufactured there. Apple began having some older iPhone models manufactured in India by a smaller supplier, Wistron, in 2017, but only increased output last year.
While manufacturing in India was initially designed to serve the large domestic market, Apple is now growing the country as a strategic production base, with exports destined for regions such as Europe, according to sources briefed on the topic.
According to Counterpoint Research, India is already a significant participant in handset production, including smartphones and feature phones, with its worldwide market share increasing from roughly 9% in 2016 to 16% in 2021. China’s stake fell from 74% in 2016, prior to the trade war and epidemic, to approximately 67% in 2021.
India aims for more investments
To entice more investment, India aims to spend $30 billion to enhance its electronics supply chain, from semiconductors and materials to displays and electronics production.
When it comes to boosting production in India, Foxconn is Apple’s most essential supplier. The world’s largest electronics contract maker has been present in India since 2015, with important production facilities in the states of Andhra Pradesh and Tamil Nadu. Luxshare also intends to expand production in Tamil Nadu, while Pegatron, another assembler, has an iPhone production facility in the state.
According to Joey Yen, an IDC tech expert, India will emerge as a crucial alternative for electronics production outside of China. “India is learning from China’s success and has the potential to become a significant role in the global supply chain. It has a large workforce, young engineering talent, and a gigantic domestic market as a basis “Yen stated.
According to the expert, the Indian government’s long-standing efforts to entice investment in the electronics manufacturing sector are finally bearing fruit. “China’s ongoing Covid-zero policies are also causing IT businesses to look for alternatives, and India may have an opportunity to expand in the long run. However, it will take a long time for India to become more transparent about all of its rules and to truly have a more complete supply chain “She stated.
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