- US tech giant adds production in India to rely less on China
- Its production in India has so far been limited to the iPhone
A key supplier to Apple Inc. has started manufacturing components for AirPods in India, marking a significant step in the U.S. tech giant’s push to expand production in the country.
Jabil Inc.’s Indian unit has begun shipping AirPods, or plastic bodies, boxes to China and Vietnam, where the wireless earphones are assembled, said people familiar with the matter, who asked not to be identified as the move is not public.
Apple is building production in India to reduce its reliance on China, where U.S. trade restrictions and Covid-related disruptions have made manufacturing riskier. Its production in India has so far been limited to the iPhone, making AirPods Apple’s second product now partially manufactured in the country.
Prime Minister Narendra Modi has made it a national priority to grow India’s manufacturing sector by providing financial incentives and government support for companies’ expansion projects. Apple has played a central role in that effort, with partners like Hon Hai Precision Industry Co. producing more iPhones in the country for the latest generation than ever before.
U.S. manufacturing services provider Jabil operates an 858,000-square-foot (80,000-square-meter) facility employing more than 2,500 workers in Pune, western India, according to its website.
Representatives for Jabil did not respond to a request for comment. Apple declined to comment.
Apple is the world’s largest manufacturer of so-called true wireless stereo devices, a category that includes headphones and headphones. It shipped 23.8 million units in the third quarter for a 31% market share, according to research firm Canalys.
While India is still a while away from getting Apple to manufacture AirPods locally, New Delhi has given initial authorizations to more than a dozen of its Chinese suppliers to increase through joint ventures with Indian partners. Luxshare Precision Industry Co Ltd., one of Apple’s Chinese suppliers that makes AirPods, is among the companies that won that approval. In 2020, Luxshare agreed to take over a closed Motorola plant in the southern Indian state of Tamil Nadu but has yet to start manufacturing Apple products locally.
Apple’s latest push in India comes as the Modi government is drawing up plans to give financial incentives for local production of wireless earphones and smartwatches, one of the people said.
“Making cabinets is often the first step to full production of AirPods,” said Neil Shah, vice president of research at Counterpoint. “Now that Apple has gotten initial approval for some suppliers, including Luxshare, they’re building a supply chain for the final product.”
Cupertino, California-based Apple has a long way to go to diversify outside of China, which makes up nearly 98% of iPhones. Tensions between Washington and Beijing, and a Covid outbreak at a major plant in the country exposed vulnerabilities in the company’s supply chain.
Still, the company has made progress with the effort. Partner Hon Hai last year began manufacturing the iPhone 14 in India just weeks after the model’s global launch, and Apple exported more than $2.5 billion of its devices from the South Asian nation from April to December.
Source: Bloomberg
