Foxconn, the world’s largest contract electronics maker, has won an order from Apple to manufacture AirPods, reported Reuters citing two sources. The Taiwan-based company plans to build a factory in India to produce the true wireless stereo (TWS) earbuds. This deal marks Foxconn’s entry into the AirPods supply chain and highlights its efforts to diversify production away from China.
While several Chinese suppliers currently manufacture AirPods, Foxconn officials have reportedly debated internally for months on whether to assemble AirPods, due to the relatively lower profit margins.
However, the company ultimately decided to proceed with the deal to strengthen its relationship with Apple and to be more likely to secure orders for Apple’s new products.
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According to one of the sources, the decision to set up production in India was made at the request of Apple.
Foxconn Interconnect Technology Ltd., a Foxconn subsidiary, is expected to invest more than $200 million in the new India AirPods plant in Telangana and plans to begin production by the end of 2024 at the earliest.
While Apple and its suppliers have been shifting production away from China, where the coronavirus-induced pandemic disrupted Foxconn’s largest iPhone factory last year, it is unclear whether Foxconn’s production plan will affect current AirPod suppliers. Apple and Foxconn reportedly declined to comment on the matter.
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Meanwhile, Apple is reportedly delaying bonuses for some corporate divisions and intensifying its cost-cutting efforts as the company aims to streamline operations. The move will reportedly reduce the frequency of bonuses for some of the company’s corporate workforce.
Apple typically distributes bonuses and promotions once or twice per year, depending on the division. However, the majority of Apple’s divisions have already moved to a once-a-year schedule for bonuses and promotions, including software engineering and services, while staff in operations, corporate retail, and other groups had still been on the outgoing biannual plan.
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