Apple Supplier in India Begins Making Components for AirPods

A key supplier for Apple Inc. has started making components for AirPods in India, a significant move for the US tech giant as it looks to expand production in the country.

Jabil Inc.'s Indian unit has started shipping AirPods enclosures to China and Vietnam for assembly, according to people familiar with the matter. The move has not been publicly announced.

Apple is expanding its production in India in order to reduce its reliance on China. With US trade restrictions and Covid-related disruptions making manufacturing in China more risky, Apple is looking to India to help meet its demand. So far, Apple has only manufactured the iPhone in India, but with the addition of AirPods, it is now manufacturing two products in the country.

Narendra Modi, the Prime Minister of India, has made it a national priority to grow India’s manufacturing sector. To achieve this, he has provided financial incentives and government support for companies’ expansion projects. Apple has played a central role in this effort, with partners such as Hon Hai Precision Industry Co. producing more iPhones in the country for the latest generation than ever before.

Jabil, a US-based manufacturing services provider, operates a 858,000 square foot (80,000 square meter) facility in Pune, western India, employing more than 2,500 workers, according to its website.

Jabil representatives did not respond to a request for comment. Apple also declined to comment.

Apple is the world’s largest manufacturer of true wireless stereo devices, including earphones and headphones. In the third quarter, the company shipped 23.8 million units for a 31% market share, according to research firm Canalys.

Although India is not yet ready for Apple to manufacture AirPods locally, New Delhi has given initial clearances to more than a dozen of its Chinese suppliers to ramp up production via joint ventures with Indian partners. Luxshare Precision Industry Co Ltd., one of Apple’s Chinese suppliers which makes AirPods, is among the companies gaining that approval. Luxshare in 2020 agreed to take over a shuttered Motorola plant in India’s southern Tamil Nadu state, but has not yet begun manufacturing Apple products locally.

Apple is making a push in India as Modi’s government is drawing up plans to give financial incentives for local production of wireless earphones and smartwatches, one of the people said.

According to Neil Shah, vice president of research at Counterpoint, making enclosures is typically the first step for full-fledged production of AirPods. He added that, now that Apple has won initial approval for some suppliers including Luxshare, they are obviously building a supply chain for the end product.

Apple, based in Cupertino, California, has a long way to go to diversify its supply chain away from China. Nearly 98% of iPhones are made in China, and tensions between Washington and Beijing, as well as a recent Covid outbreak at a major Chinese factory, have exposed vulnerabilities in Apple's supply chain.

Despite some setbacks, the company has made progress with its efforts to produce iPhones in India. Partner Hon Hai began making the iPhone 14 in India last year, just weeks after the model's global launch. And from April to December, Apple exported more than $2.5 billion worth of its devices from India.