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Taiwanese subcontractor Foxconn has won an order to make AirPods for Apple Inc and plans to build a factory in India to produce the wireless headphones, two people with direct knowledge of the matter told Reuters. The deal will see Foxconn, the world's largest contract electronics maker and assembler of around 70% of all iPhones, become a supplier of AirPods for the first time and underscores efforts by top supplier Apple to further diversify. production outside of China. AirPods are currently made by a variety of Chinese suppliers. ALSO READ: Apple to make latest iPhone 14 in India, says 'delighted to...'
A source said that Foxconn will invest more than $200 million in the new India AirPods factory in the southern Indian state of Telangana. The value of the AirPods order was not immediately clear.
The person, who asked to remain anonymous because the matter was not yet public, said Foxconn officials had been debating internally for months whether to put together the AirPods due to relatively weaker profit margins in manufacturing the device, but ultimately they chose to go through with the deal to "strengthen engagement" with Apple.
“That way we are more likely to get orders for your new products,” the person said.
The decision to set up production in India was requested by Apple, according to the source.
Foxconn is competing with Taiwanese rivals such as Wistron Corp and Pegatron Corp to win more orders from Apple, the world's most valuable company.
Shares of the Foxconn unit rose nearly 9% after Reuters first reported the news, reversing an earlier loss of 2.2%. Foxconn's own shares rose 0.5%, while the benchmark Taipei index fell 1.1%. A second person with direct knowledge of the matter, who also declined to be named because the matter was not yet public, said the Foxconn subsidiary would make AirPods in India without providing further details. Analysts have previously said that Apple has asked suppliers, including Foxconn, to make AirPods in India, but details such as the size of the investment, timing and suppliers with manufacturing plans in the country were not disclosed. Foxconn declined to comment. Apple did not immediately respond to a request for comment. Apple and its major suppliers have moved production out of China, where strict COVID-19 restrictions disrupted Foxconn's largest iPhone factory last year. They also seek to avoid a potential impact on business from increasing trade friction between China and the United States. ALSO READ: iPhone maker Apple has $100 million "indirect exposure" to SVB collapse. Foxconn said on Wednesday it would increase investment outside of China to meet consumer demand and reduce its reliance on China for production. It was not immediately clear if Foxconn's production plan would affect existing AirPod suppliers, including Luxshare Precision Industry. Luxshare did not immediately respond to a Reuters request for comment. Goertek Inc, another supplier, said in November that a foreign customer had asked it to suspend assembly work on a smart acoustic product, which analysts identified at the time as the AirPods Pro 2, and that the suspension would hit revenue by up to $3,300. million yuan ($480). ). million). Goertek did not respond to a request for comment.
Shares of the Foxconn unit rose nearly 9% after Reuters first reported the news, reversing an earlier loss of 2.2%. Foxconn's own shares rose 0.5%, while the benchmark Taipei index fell 1.1%.
A second person with direct knowledge of the matter, who also declined to be named because the matter was not yet public, said the Foxconn subsidiary would make AirPods in India without providing further details.
Analysts have previously said that Apple has asked suppliers, including Foxconn, to make AirPods in India, but details such as the size of the investment, timing and suppliers with manufacturing plans in the country were not disclosed.
Foxconn declined to comment. Apple did not immediately respond to a request for comment.
Apple and its major suppliers have moved production out of China, where strict COVID-19 restrictions disrupted Foxconn's largest iPhone factory last year. They also seek to avoid a potential impact on business from increasing trade friction between China and the United States.
ALSO READ: iPhone Maker Apple has $100 million 'indirect exposure' from SVB collapse
Foxconn said on Wednesday it would increase investment outside of China to meet customer demand and reduce its reliance on production in China.
It was not immediately clear if Foxconn's production plan would affect existing AirPod suppliers, including Luxshare Precision Industry.
Luxshare did not immediately respond to a Reuters request for comment.
Goertek Inc, another supplier, said in November that a foreign customer had asked it to suspend assembly work on a smart acoustic product, which analysts identified at the time as the AirPods Pro 2, and that the suspension would hit revenue by up to $3,300. million yuan ($480). ). million).
Goertek did not respond to a request for comment.
