FOXCONN, a contract manufacturer in Taiwan and the largest electronics maker globally, has been awarded a contract by Apple Inc to produce AirPods and intends to construct a factory in India for this purpose, according to two individuals who have direct knowledge of the matter.
This agreement will make Foxconn an AirPod supplier for the first time, and it demonstrates the company’s efforts to reduce its dependence on China by diversifying its production.
One of the sources stated that Foxconn intends to invest over $200 million in the new AirPod plant in the southern Indian state of Telangana, although the value of the AirPod order has not been disclosed.
The person, who requested anonymity as the matter was not public yet, said Foxconn officials had debated internally for months about whether to assemble AirPods due to relatively lower profit margins on making the device, but ultimately opted to go ahead with the deal to “reinforce engagement” with Apple.
“That way, we are more likely to get orders for their new products,” the person said.
The decision to set up production in India was requested by Apple, according to the source.
Foxconn vies with Taiwanese rivals such as Wistron Corp and Pegatron Corp to win more orders from Apple, the world’s most valuable company.
A subsidiary, Foxconn Interconnect Technology Ltd, plans to start construction of a manufacturing facility in Telangana in the second half of this year and begin production by the end of 2024 at the earliest, the person said.
A second person with direct knowledge of the matter, who also declined to be identified as the matter was not yet public, said the Foxconn subsidiary will make AirPods in India without providing further details.
Analysts have previously said Apple has asked suppliers including Foxconn to make AirPods in India, but details such as the size of investment, timeline 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.